PARIS, May 26 — Global stock markets climbed yesterday, buoyed by the prospect of further easing of coronavirus lockdowns despite sharp increases in case rates in some countries such as Brazil.
On the downside, an upsurge in Sino-US tensions, especially over Chinese plans to introduce a national security law in Hong Kong, made for some caution.
Over the weekend, US President Donald Trump imposed travel limits on Brazil, now the second worst affected country after the United States, reminding markets that while the coronavirus outlook is better, the crisis is far from over.
Japan meanwhile lifted a state of emergency in Tokyo, while Spain and Italy are preparing to reopen their borders to kickstart their crucial tourism sectors.
Greece, Germany and the Czech Republic are also on course to allow bars and restaurants to resume service, while primary schools in parts of England are due to restart from next month.
“Global investors are continuing to map the reopening of global economies to the overall risk narrative,” said Stephen Innes of AxiCorp
“The global stock markets are moving higher with positive changes in mobility data. According to recent mobility data, the global economy has taken a giant step toward normality in the last week.”
In European trade yesterday, Paris rose 2.2 per cent and Frankfurt jumped 2.9 per cent, helped by a more positive German business confidence report for May compared with a disastrous showing in April.
A nine-billion-euro rescue package for Lufthansa helped shares in the airline take off by 7.5 per cent, while shares in Bayer jumped 7.8 per cent after reports it was close to a mass deal with American plaintiffs who say their cancers were caused by unit Monsanto’s Roundup weedkiller.
Public holidays in Britain and the US meant trade was relatively low key however.
In Asia, Tokyo ended 1.7 per cent higher, Sydney added more than two per cent, Shanghai put on 0.2 per cent. Hong Kong recovered from a morning drop to edge up 0.1 per cent, after losses of more than five per cent Friday and despite violent weekend protests at China’s plan to impose a security law that would effectively suppress the former British colony’s pro-democracy movement.
Sino-US ‘Cold War’
The move has also raised concern about Hong Kong’s future as a financial hub, with the US already passing a bill that would strip the city’s preferential trading status if it no longer enjoys autonomy from mainland China.
“One big threat to the recovery in markets is the escalating war of words between the US and China,” said Shane Oliver at AMP Capital Investors.
But he added: “The main focus will likely remain on continuing evidence that the number of new Covid-19 cases is slowing in developed countries, progress towards medical solutions, the reopening of economies and signs that economic activity is picking up.”
While analysts expect Trump to continue his attacks on China heading into November’s presidential election, they say he is unlikely to take action that threatens the trade detente with Beijing.
Oil prices bounced back from an early sell-off, winning support from the easing of lockdowns and huge output cuts by key producers.
Key figures at around 1530 GMT
Paris — CAC 40: UP 2.2 per cent at 4,539.91 points (close)
Frankfurt — DAX: UP 2.9 per cent at 11,391.28 (close)
EURO STOXX 50: UP 2.1 per cent at 2,965.33
London — FTSE 100: Closed for public holiday
New York — Dow: Closed for public holiday
Tokyo — Nikkei 225: UP 1.7 per cent at 20,741.65 (close)
Hong Kong — Hang Seng: UP 0.1 per cent at 22,952.24 (close)
Shanghai — Composite: UP 0.2 per cent at 2,817.97 (close)
West Texas Intermediate: UP 2.1 per cent at US$33.94 per barrel
Brent North Sea crude: UP 1.8 per cent at US$35.76 per barrel
Euro/dollar: DOWN at 1.0896 from US$1.0904 at 2100 GMT Friday
Dollar/yen: UP at 107.71 yen from 107.56 yen
Pound/dollar: UP at US$1.2195 from US$1.2167
Euro/pound: DOWN at 89.35 pence from 89.60 pence
* Bloomberg News contributed to this story. — AFP