Stocks rally on vaccine hope, US jobs recovery

July 02, 2020: Equities rose Thursday as investors cheered encouraging news about progress towards a coronavirus vaccine and a solid recovery in US employment.

The US economy regained 4.8 million jobs in June as businesses began to reopen nationwide, while the unemployment rate fell more than two points to 11.1 percent, the Labor Department reported Thursday.

The job creation amid the coronavirus pandemic was far higher than economists were expecting, and showed the rapid pace of gains as people who were laid off returned to their jobs, especially in hard-hit sectors like leisure and hospitality, which accounted for just under half of the increase.

“The key takeaway from the report as far as the market is concerned is that it reflects an economy that is bouncing back from the depths of the COVID-19 shutdown period,” said market analyst Patrick J. O'Hare at Briefing.com.

“There are still far too many people unemployed (17.750 million), yet the June numbers are moving in the right direction,” he said in a note to clients.

– 'Holy grail' –

Wall Street's main indices shot out of the gate at the opening bell, quickly racking up gains of over 1 percent, with the tech-heavy Nasdaq Composite continuing to push into record territory.

European stocks added to gains, with both Frankfurt and Paris up by more than 2 percent.

Sentiment had already been largely positive after hopes for a vaccine were given a boost when Germany's BioNTech and US pharmaceutical giant Pfizer late Wednesday reported positive preliminary results from a joint project.

“Investors largely are shrugging off higher cases… as Pfizer reported positive results from a vaccine trial,” said Neil Wilson at Markets.com.

“We have been here before — it's too early to get too excited — but a working vaccine is the holy grail as it would allow real normality to return to the economy.”

Markets had been rattled in recent days by a surge of coronavirus infections in a number of countries, led by the United States, which on Wednesday reported more than 50,000 new cases for the first time.

Moreover, several US states imposed 14-day quarantines on visitors ahead of the July 4 weekend celebrations.

And the World Health Organization warned that with more than 10 million known infections worldwide and more than 500,000 deaths, the pandemic is “not even close to being over”.

In Asia, Hong Kong led gains on reopening after a one-day break, despite concerns about a new security law imposed on the city by China that observers said was more draconian than feared and could impact its future as an attractive business hub.

And while there are worries about the issue causing further friction between Beijing and the West, markets remain positive for now.

– Key figures around 1330 GMT –

  • London – FTSE 100: UP 1.4 percent at 6,246.62 points
  • Frankfurt – DAX 30: UP 2.6 percent at 12,579.17
  • Paris – CAC 40: UP 2.4 percent at 5,044.78
  • EURO STOXX 50: UP 2.7 percent at 3,314.62
  • New York – Dow: UP 1.6 percent at 26,145.93
  • Hong Kong – Hang Seng: UP 2.9 percent at 25,145.96 (close)
  • Tokyo – Nikkei 225: UP 0.1 percent at 22,145.96 (close)
  • Shanghai – Composite: UP 2.1 percent at 3,090.57 (close)
  • West Texas Intermediate: UP 1.1 percent at $40.24 per barrel
  • Brent North Sea crude: UP 1.2 percent at $42.55
  • Euro/dollar: UP at $1.1267 from $1.1249 at 2100 GMT
  • Dollar/yen: UP at 107.60 yen from 107.43 yen
  • Pound/dollar: UP at $1.2488 from $1.2468
  • Euro/pound: UP at 90.29 pence from 90.19 yen

AFP/APP

Posted on: 2020-07-03T01:25:00+05:00

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