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European shares rally as investors begin May in bullish mood

Stock Markets May 03, 2021 04:30AM ET
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2/2 © Reuters. FILE PHOTO: Screen displays Nikkei share average and stock indexes outside a brokerage in Tokyo 2/2

By Tommy Wilkes

LONDON (Reuters) - European shares gained on Monday as investors bullish about the global economic recovery looked ahead to a busy week for U.S. economic data that is expected to underline the strength of the rebound.

With China, Japan and Britain closed for public holidays, volumes were thin and Asian shares got off to a slow start, with most markets slipping into the red.

But investors' optimistic mood, enhanced by a strong run of corporate earnings the past two weeks, has extended into May in Europe.

The Euro STOXX index rose 0.68% in early trading, while the German DAX gained 0.7% and France's CAC 40 0.61%.

Wall Street futures were higher, pointing to yet more gains after stock markets notched up another round of record highs last week.

The MSCI world equity index, which tracks shares in 49 countries, was flat on the day and below record highs, however, as losses in Asia offset the gains in Europe.

Underpinning investors' enthusiasm for riskier assets is the sense that the global economy is about to boom as countries come out of lockdowns and consumers and businesses unleash some of their excess savings built up over the past year.

German retail sales data for March came in far better than expected, underlying that a U.S.-led economic rebound is now gaining traction elsewhere.

Recent business surveys have also pointed to soaring confidence about the recovery, although some economists think businesses may be getting ahead of themselves and influenced more by the success and speed of COVID-19 vaccination rollouts.

"The data has been unrealistically strong in recent months - while the underlying economy is performing very well, manufacturing growth is not quite at the stratospheric levels the surveys imply," said UBS economist Paul Donovan.

"Newsflow about the vaccination cycle may be more important in dictating answers to sentiment surveys than actual economic activity."

A busy week for U.S. economic data is expected to show resounding strength, particularly for the ISM manufacturing survey and April payrolls. Forecasts are that 978,000 jobs were created in the month as consumers spent their stimulus money and the economy opened up more.

Analysts at NatWest Markets, for instance, see U.S. payrolls surging by 1.25 million in April with unemployment diving to 5.2%, from 6% in March.

Such gains could stir speculation of a tapering in asset purchases by the Federal Reserve, though Chair Jerome Powell has shown every sign of staying patient on policy.

Powell is due to speak later on Monday and will be followed by a raft of Fed officials this week. Dallas Fed President Robert Kaplan caused a stir on Friday by calling for beginning the conversation about tapering.

Powell's patience has helped limit selling pressure in Treasuries, yet 10-year yields still ended last week with a rise of 6 basis points. They were last 1.626%, down marginally on the day.

The rise offered some support to the U.S. dollar, which has been pressured by the rapid expansion of the U.S. budget and trade deficits, a byproduct of the economy's outperformance.

The dollar index stood at 91.218 and off a two-month trough of 90.422, though it still ended April with a loss of 2%.

The euro rose 0.2% to $1.2040, having backtracked from a nine-week peak of $1.2149 on Friday.

Cryptocurrency ether scaled a new record high beyond $3,000 as investors bet that it will be of ever greater use in a decentralised future financial system. Its lightning rally - now up 325% in 2021 - has eclipsed that of bigger rival bitcoin.

Oil prices ran into profit-taking, having ended last month with gains of 6% to 8%. [O/R]

Brent was last down 9 cents at $66.67 a barrel, while U.S. crude lost 6 cents to $63.52 per barrel.

European shares rally as investors begin May in bullish mood
 

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Comments (8)
Francis Castillo
Francis Castillo May 03, 2021 6:55AM ET
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inventors lol
John Dislias
HephaestusTrades May 03, 2021 5:48AM ET
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Why dont you write about fake news of reuters of tme fine is 77K and no 1.5B as initialy reported ?
Farting Joe
Farting Joe May 03, 2021 4:51AM ET
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Investors...lol
Dave Jones
Dave Jones May 03, 2021 2:41AM ET
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so a million jobs per month for the next few months is already priced in? Doing what jobs exactly? Manufacturing? Design? Engineering? High paying jobs or just gig jobs like uber and Starbucks? And how many Starbucks would have to open? Stores I'm seeing shuttered up in the malls are NEVER coming back? Please say what jobs are coming?
Todd Gray
Todd Gray May 03, 2021 12:11AM ET
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a fool would go long at the peak of the most irrational, overvalued market in US history. but, there are many fools in America. how else do you describe 5% of the world population consuming around half of all the goods made in the entire world. we rock.
Chris Poulos
Chris Poulos May 03, 2021 12:11AM ET
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last i checked there were 74,222,958 fools in america ...
CHAD TENDIES
CHAD TENDIES May 02, 2021 11:15PM ET
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Massive crash coming
Steve Uzor
Steve Uzor May 02, 2021 11:15PM ET
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@chad tendies... crash on which Currency pls... i trade the NZD/JPY
Todd Gray
Todd Gray May 02, 2021 9:37PM ET
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all that's priced in. I'd bet there's going to be a selloff into whatever strength remains.
jamal jamal
jamal jamal May 02, 2021 9:00PM ET
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Always buy the dip!! Instant profits again. Market always goes UP!!! BUY BUY BUY!!
Robert Cencarik
Robert Cencarik May 02, 2021 9:00PM ET
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lol... you've explained it well...
Steve Uzor
Steve Uzor May 02, 2021 9:00PM ET
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isnt buying at wrong entry points and resistance levels dangerous ?
 
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