European stocks rebound as investors start May in bullish mood
A man holding an umbrella walks in front of an electrical panel showing the Nikkei index at a brokerage house in Tokyo, Japan, February 15, 2021. REUTERS / Kim Kyung-Hoon
European stocks gained on Monday as investors bullish on the global economic recovery expected a busy week for US economic data which should underline the strength of the rebound.
With China, Japan and Britain closed for the holidays, volumes were meager and Asian stocks started slowly, with most markets slipping into the red.
But the optimistic investor mood, reinforced by a sharp rise in corporate profits over the past two weeks, extended into May in Europe.
The Euro STOXX index (.STOXXE) rose 0.68% at the start of the session, while the German DAX (.GDAXI) rose 0.7% and France’s CAC 40 (.FCHI) rose 0 , 61%.
Wall Street futures were higher, indicating even more gains after the stock markets set a new set of highs last week.
The MSCI Global Stock Index (.MIWD00000PUS), which tracks stocks from 49 countries, was flat on the day and below record highs as losses in Asia offset gains in Europe.
Investor enthusiasm for riskier assets is based on the belief that the global economy is about to thrive as countries emerge from lockdowns and consumers and businesses release some of their excess savings accumulated over the course of the year. the last year.
German retail sales data for March were much better than expected, suggesting that a US-led economic rebound is now gaining ground elsewhere.
Recent business surveys have also highlighted growing confidence in the recovery, although some economists believe businesses could get ahead and be further influenced by the success and speed of COVID vaccination deployments. -19.
“The data has been unrealistic in recent months – while the underlying economy is performing very well, growth in manufacturing is not quite at the stratospheric levels that the surveys imply,” the economist said. UBS Paul Donovan.
“The flow of information about the immunization cycle may be more important in dictating responses to sentiment surveys than actual economic activity.”
A busy week for US economic data should show resounding strength, especially for the April ISM Manufacturing and Payrolls Survey. It is forecast that 978,000 jobs were created during the month as consumers spent their stimulus money and the economy opened up further.
Analysts at NatWest Markets, for example, see the US payroll increase by 1.25 million in April, with unemployment plunging to 5.2%, from 6% in March.
Such gains could spark speculation about a decrease in asset purchases by the Federal Reserve, although President Jerome Powell has shown every sign of remaining patient with politics.
Powell is due to speak later Monday and will be followed by a series of Fed officials this week. Dallas Fed Chairman Robert Kaplan caused a stir on Friday by calling to start the conversation about the phase-down. Read more
Powell’s patience helped limit the selling pressure on Treasuries, but 10-year yields still ended last week with a 6 basis point increase. They were the last at 1.626%, down slightly on the day.
The rise offered some support to the US dollar, which was put under pressure by the rapid expansion of the US budget and trade deficits, a by-product of the economy’s outperformance.
The dollar index stood at 91.218 and out of a two-month low of 90.422, although it still ended April with a loss of 2%.
The euro rose 0.2% to $ 1.2040, after declining from a nine-week high of $ 1.2149 on Friday.
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Oil prices saw some profit taking, after finishing last month with gains of 6% to 8%.
Brent last lost 9 cents to $ 66.67 per barrel, while US crude lost 6 cents to $ 63.52 per barrel.