Sunday , January 17 2021
Home / Business / Equities rally on hopes for economic rebound
 Nrm Image

Equities rally on hopes for economic rebound

London, United Kingdom | AFP | Stock markets picked up Wednesday on hopes for a strong US economic rebound even though retailers reported mixed results and US-China tensions continued to mount.

Equities have enjoyed a broad advance for several weeks as virus infection and death rates slow, allowing governments to lift strict stay-at-home measures that have hammered businesses.

But, while there was a general feeling the worst is past, increased China-US tensions continue to cast a shadow over trading floors.

Meanwhile, the dollar declined against its main rivals, while oil prices rose.

Global markets have been weighing hopes for an economic rebound as more countries relax confinement measures after a flood of expected but dreadful data on unemployment, business outlooks and consumer confidence.

The World Bank warned the crisis could leave about 60 million people in extreme poverty, and estimated that the global economy might contract by five percent this year.

Markets in Europe were mixed earlier in the day, but perked up when New York weighed in, with the Dow Jones index gaining 1.6 percent in morning trade.

“US equities are showing signs of resilience after the testimonies from both Fed Chair (Jerome) Powell and Treasury Secretary (Steven) Mnuchin remind (that) more stimulus is likely just around the corner,” remarked Edward Moya at online broker OANDA.

Meanwhile, US retail giant Target reported an 11.3 jump in first quarter sales to $19.6 billion, but also a 64.3 percent drop in profits owing to higher costs that included bonuses to hourly workers and extra cleaning related to the coronavirus pandemic.

“We are being fairly cautious,” Shawn Matthews of Hondius Capital Management told Bloomberg TV. “If you look at the economy, it feels like it’s the summer of hope right now — where everyone is hoping it’s going to turn around.”

Tokyo closed with a gain of 0.8 percent, Hong Kong edged 0.1 percent higher, Sydney rose 0.2 percent and Mumbai added 0.9 percent.

But Shanghai dipped 0.5 percent and Singapore shed 0.9 percent.

London, Paris and Frankfurt all advanced in afternoon trading.

Investors were keeping tabs on Washington, where House Democrats have passed a $3 trillion aid bill, to add to a similar stimulus already agreed.

But Republican senators are unlikely to push it through, saying existing measures should first flow through the economy.

Analysts have warned that the deep divisions on Capitol Hill, particularly with the presidential election looming in November, will likely mean a new deal cannot be expected any time soon.

– Key figures around 1415 GMT –

London – FTSE 100: UP 0.5 percent at 6,032.12 points

Frankfurt – DAX 30: UP 0.6 percent at 11,135.81

Paris – CAC 40: UP 0.1 percent at 4,461.09

EURO STOXX 50: UP 0.4 percent at 2,914.80

New York – Dow: UP 1.6 percent at 24,599.96

Tokyo – Nikkei 225: UP 0.8 percent at 20,595.15 (close)

Hong Kong – Hang Seng: UP 0.1 percent at 24,399.95 (close)

Shanghai – Composite: DOWN 0.5 percent at 2,883.74 (close)

Brent North Sea crude: UP 1.6 percent at $36.25 per barrel

West Texas Intermediate: UP 1.7 percent at $33.62

Euro/dollar: UP at $1.0995 from $1.0927 at 2110 GMT

Dollar/yen: DOWN at 107.43 yen from 107.66 yen

Pound/dollar: UP at $1.2263 from $1.2242

Euro/pound: UP at 89.67 pence from 89.15 pence

Leave a Reply

Your email address will not be published. Required fields are marked *