Wall Street stocks closed higher overnight as investors continued to focus on the prospects of a recovery in business activity in the wake of the coronavirus pandemic. The Dow Jones Industrial Average rose 1.1%, the S&P 500 index gained 0.8%, and the Nasdaq Composite Index advanced 0.6%.
In Asia, stocks climbed to three-month highs amid hopes of more stimulus and further easing in social restrictions around the world, outweighing the growing U.S. civil unrest. On the positive side, China’s service sector activity recovered to pre-epidemic levels in May, suggesting the economic rebound from the pandemic could be already taking place. On the geopolitical front, China’s Foreign Ministry responded to the UK Prime Minister Boris Johnson’s recent comments, citing that Britain has no jurisdiction or supervision over Hong Kong. Still, investors were unfazed by the news.
European stock markets opened on the positive territory ahead of the ECB policy meeting due on Thursday. It is widely expected that the European central bank will ramp up its stimulative bond purchases. The Stoxx Europe 600 index climbed over 1%. On the data front, the UK services sector activity improved more-than-expected in May but remained into contraction. In particular, IHS Markit/CIPS UK services PMI was revised higher to 29.0 in May versus 28.0 expected.
Elsewhere, the European currencies remain on the offensive amid a widespread risk-on sentiment. EURUSD exceeded the 1.12 handle and extended gains to 1.1227. the common currency is supported by reports that Germany is planning to lift a travel ban for the European Union (EU) member states, UK, Iceland, Norway, Liechtenstein, and Switzerland from June 15. Meanwhile, Eurozone May final services PMI came in at 30.5 versus the preliminary estimate of 28.7.
In the oil market, Brent crude jumped to the 100-DMA around $40.50. The futures have retreated partially since then and are now trying to cling to the $40 handle during the European hours. Traders are inspired by the prospect of the OPEC+ deal prolongation coupled with upbeat investor sentiment. Still, there is a risk of a downside correction at this stage as the current levels are looking attractive for profit-taking.
