Trading

Global stocks, euro surge ahead of U.S jobs data

World stocks held their ground near three-month highs as the euro hit its highest level since March 10, due to European Central Bank’s stimulus which increased hope for a global rebound.

The European Central Bank’s pledge to supply extra cash to its Pandemic emergency purchase programme led the pan-European STOXX 600 to rise by 1.3%.

MSCI’s broadest index of Asia-Pacific shares outside of Japan rose 0.7%, reversing early losses to stay near a 12-week top.

The index is up about 7.4% this week, on track for its best weekly showing since December 2011.

With investors tentatively in risk-on mode, emerging market stocks were up 0.6% on the day and on course for their best week since December 2011.

“The European Central Bank decision was better then expected in terms of liquidity. The market has been driven by the sentiment that everything is going well and a recovery is in sight for the second half of the year. But the big question is is the market ahead of fundamentals? There’s room for consolidation,” said Francois Savary, chief investment officer at Swiss wealth manager Prime Partners.

It would be recalled that the World equity markets were thrashed in March on fears that the COVID-19 driven lockdowns would push the global economy into a long and deep recession.

Market sentiment has since been bolstered by the central bank stimulus.

Investors attention are now focused on Friday’s U.S. employment report, which is expected to show nonfarm payrolls fell in May by 8 million jobs after a record 20.54 million plunge in April.

The U.S. unemployment rate is forecast to rocket to 19.8%, a post-World War Two record, from 14.7% in April.

Currency markets continued to show confidence in the expected revival of the global economy.

Set for a third straight week of gains, the euro rose to $1.1380, its highest level since March 10 and was on course for a weekly jump of 2.5% and a ninth straight day of gains, its longest series of rises on record since Oct 2004.

The dollar index is on track for its third consecutive week of losses at 96.611, close to its lowest in nearly three months.

All eyes will next be on the U.S. Federal Reserve, which holds its regular two-day policy meeting next week.

The Australian dollar rose 0.8% to $0.6999, briefly rising above $0.70 for the first time since early January.

German government bond yields hit their highest levels in months, while Italian and other low-rated Southern European borrowing costs dropped further after the ECB’s hefty support effort.

In commodities, U.S. crude gained 1.4% to $37.92 per barrel and Brent added 0.8% to $40.76, with benchmarks on track for a sixth week of gains, thanks to output cuts amid signs of improving fuel demand.

Spot gold was down 0.2% at $1,708.07 per ounce, set for a third consecutive weekly decline as economic recovery hopes fuelled demand for riskier assets.

Source: Voice of Nigeria