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European shares pick up, dollar gains before quarter-end

Published 06/29/2020, 08:03 PM
Updated 06/30/2020, 08:17 AM
© Reuters. FILE PHOTO: A man wearing a protective face mask walks past the Singapore Exchange

By Elizabeth Howcroft

LONDON (Reuters) - European shares picked up on Tuesday after a weak start, extending the optimism of the Asian session, and oil prices steadied as investors looked for signs of an economic recovery in the second half of 2020.

The MSCI world equity index, which tracks shares in 49 countries, was up about 0.1% at 1056 GMT, after Asian shares rose on strong data from the U.S. housing market and Chinese factories. European shares continued the rally.

World shares are down around 8% so far this year, having slumped 35% between Feb. 20 and March 23 in the most destructive sell-off since the Great Depression. But the world equity index is up 17.5% this quarter - on track for its biggest quarterly gain since the second quarter of 2009. (Graphic: Global markets and the tale of two quarters, https://fingfx.thomsonreuters.com/gfx/mkt/yzdpxrrxwpx/Pasted%20image%201593105658002.png)

Rising COVID-19 cases continue to show signs of a second deadly wave of the pandemic, but markets still expect a global economic recovery with lockdown measures easing.

Los Angeles has become a new epicentre in the pandemic as coronavirus cases and hospitalisations surge there despite California Governor Gavin Newsom's orders requiring bars to close and residents to wear masks in nearly all public spaces.

The World Health Organization (WHO) will "read carefully" a Chinese study on a new flu virus found in pigs, a spokesman said, adding that the findings underscored the importance of influenza surveillance during the current pandemic.

"Asset markets are looking beyond COVID stats," said Neil Jones, head of FX sales at Mizuho Bank. "There's some expectation of containment and then, further down the line, an expectation of some form of measure to combat the virus."

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U.S. Federal Reserve Chair Jerome Powell said on Monday the outlook for the world's biggest economy was "extraordinarily uncertain". (Graphic: World financial markets in 2020, https://fingfx.thomsonreuters.com/gfx/mkt/nmopajllwva/Pasted%20image%201593383581288.png)

European shares edged up, with the Euro STOXX 600 up 0.1% at 1102 GMT having been relatively range-bound for the past two weeks. Germany's DAX was up 0.3%.

London's FTSE 100 was down 0.6%. Britain's economy shrank by the most since 1979 in early 2020 as households slashed their spending, according to official data that included the first few days of the lockdown.

Supported by end-of-quarter flows, the dollar rose to 97.722 against a basket of currencies, up 0.3% on the day.

"I would expect overall dollar demand to continue as we go into July," Mizuho's Neil Jones said.

"If there's a summer lull then we may see a dollar sell-off into the elections but as we run up to the end of the year I would expect to see a resurgence of dollar demand," he added.

The euro was down around 0.3% against the dollar, at $1.1208, while the Australian and New Zealand dollars also edged down.

Oil prices slipped as traders took profits after sharp gains the previous session and Libya's state oil company flagged progress in talks to resume exports, potentially boosting supply. Prices then recovered partially.

U.S. crude was down 0.6% at $39.15 a barrel, having hit as low as $39.00, while Brent crude slipped 0.6% to $41.16 per barrel.

China's parliament passed national security legislation for Hong Kong in response to last year's pro-democracy protests. The United States, Britain and other Western governments have said the legislation erodes the autonomy the city was granted at its 1997 handover. Market reaction was limited.

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Demand for safe German debt was little changed, with the 10-year government Bund yield at -0.478% (DE10YT=RR).

Annual inflation in the 19 countries sharing the euro accelerated to 0.3% in June from a four-year low of 0.1% in May, beating forecasts for no change and supporting the European Central Bank's expectation that a negative reading may be avoided.

Latest comments

It follows us market most of the time.
which one is real data? industrial production in Korea and Japan or China pmi?
Scientists says earth can support 9-10 billion people.We are at 8 Billion now. Means in 10 -15 years earth is maxed out.
bring on bills cure 😆😆
hold on.. are we still believe in China's Data?
in US we believe in flat earth and the president says put inside you UV light, Chinese data is the problem?
China’s data has always been whatever the government wants the world to think it is. But the pandemic elevated China’s data to new and unprecedented levels of deep-fake status all around.
::: clutches pearls ::: they’d never do that!
clutch my natty natz
That headline...
Cheering the data?
Glad i wasnt the only one confused by this headline
Nobody cares about corona virus. Its being used to manipulate the markets
Yeah bro
Is china still 3rd world?
Developing country. It's the 2nd biggest economy.
mostly china claims herself superpower especially to towards her people. when dealing with trade, she claims herself as underdeveloped. no one knows her status.
 yeah its still third world category
Europe and mostly Asia recover from Covid. In 3rd world countries it's still getting worse (Latin America, USA etc)
USA, biggest economy in the world and 2 times world war champion, 3rd world country??
3x intercontinental 5x tag-team champion
Old news. Now back on track!
More bogus data from China of course
does data even matter in the trading world today? lol
Unbelievable belief on Chinese statistics data
totally agree. official data still says growth. fake data, recession is truth. Yangtze river flooding is destroying a medium size city and heading to si chuan province capital now.
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