Asian stocks rose to three-month highs despite US-China tensions, as President Donald Trump stopped short of economic retaliation against China over Hong Kong. China’s CSI 300 blue-chip index rallied nearly 3.0%, hitting its highest level in three months. Hong Kong’s Hang Seng jumped 3.4% while Japan’s Nikkei 225 rose 0.9%. Global markets sank late last week as investors waited for Trump’s response to Beijing’s security law on Hong Kong. The US leader ended Hong Kong’s special trade status and suspended visas of some Chinese students. At the same time, he avoided pulling out of a truce in a tariff war with Beijing that weighs on global growth.
European stocks added to gains on Monday as lockdown measures ease across the continent. Also, investors continue to react to Trump’s Friday news conference on China, in which he took no additional steps to punish China over its new national security law for Hong Kong. Meanwhile, futures on the Dow Jones Industrial Average rose over 100 points as markets shrugged off the nationwide protests and violence. Meanwhile, the number of coronavirus cases globally has now topped more than 6.1 million while many countries continue to ease lockdown measures and gradually reopen their economies.
Elsewhere, the dollar is under pressure against major counterparts as risk-on tone prevails in the financial markets. EURUSD extended gains to fresh mid-March highs around 1.1150. on the one hand, the increasing social unrest in the US unnerves investors but the progress of the re-opening of the economy on both shores of the Atlantic adds to market optimism and supports high-yielding assets including the euro. Once above the mentioned highs, the common currency will target the 1.12 barrier. On the data front, Eurozone May final manufacturing PMI came in at 39.4 versus the preliminary estimate of 39.5 while German May final manufacturing PMI arrived at 36.6 versus 36.8 in the preliminary estimate. Mixed figures capped the upside momentum, and the pair turned flat as a result.
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