Stock markets rallied on Monday. What caused the surge?

Stock markets rallied on Monday. What caused the surge?

European and Asian stocks gained on Monday, along with U.S. equity-index futures. Investors were hopeful due to new signs of economies reopening around the globe, even though U.S.-China tensions continue rising. The dollar remained steady, while crude oil held significant gains, amassed during the last week.

The S&P 500 futures jumped up by 1%, while the Euro Stoxx Index soared by 1.5% on Monday. Meanwhile, the MSCI Asia-Pacific Index rose by 0.9%, and Japan’s Topix index gained 1.7%. Hong Kong’s Hang Seng also edged up by 0.1%.

Healthcare and construction gained the most in the Euro Stoxx Index. Bayer AG skyrocketed by almost 9% after it reported about reaching agreements to conclude some cancer lawsuits over its Roundup weedkiller.

Contracts on three major U.S. gauges climbed up, and the Asian market rallied as well. Hong Kong shares increased after they fell on Friday due to police clashes at the weekend. Protesters came out against China’s move to cut off the dissent. Benchmarks in Tokyo and Sydney led the way, with their gains in the region’s stocks.

Investors are awaiting the reopening of economies from Japan to Australia and the U.S. despite the turmoil in Hong Kong, which is threatening to damage the Sino-U.S. relationship further. The futures already amassed 30% gains since the March lows. An increase in a gauge of German business expectations gave another glimmer of hope to equity traders.

What do the investors need to look out for during this week?

Meanwhile, analysts are watching for several events this week, such as the announcement of Singapore’s parliament about another stimulus package. New data about U.S. jobless claims will come out on Thursday as well, and Federal Reserve Chairman, Jerome Powell, plans to participate in a virtual discussion on Friday.

Shane Oliver, the head of the investment strategy at AMP Capital Investors in Sydney, noted that one significant threat to the rebound in markets is the escalating verbal conflicts between the U.S. and China. He thinks that the main focus will probably remain on progress towards medical solutions. There is continuous evidence that the number of new coronavirus cases is slowing in developed countries. This is a sign that economic activity is picking up and that economies are reopening.

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