The outlook seems to be brightening (Johannes EISELE)

Paris (AFP) – Global stock markets rose on Friday as optimism over easier lockdown measures and reopening economies outweighed signs that the planet may be headed for its worst downturn since the Great Depression.

A massive drop in the US payroll in April, although historic, fell shy of market expectations and failed to put much of a dent in market confidence.

The non-farm payroll fell by 20.5 million, the US government reported, which compares to the 21 million market consensus established by data firm Factset.

On Wall Street, the Dow Jones index rose nearly 300 points in the wake of the data, and the dollar edged higher, as did the oil price.

European stock markets also marginally extended their morning gains as traders seemed happy to place their confidence in mind-boggling stimulus and central bank backstopping measures, and be reassured by easing China-US tensions.

“The US and China are seemingly still on good terms over the phase one trade deal so that has removed some anxiety across markets,” said Jasper Lawler at London Capital Group.

After crashing in the space of a few weeks, global equities are up about 20 percent since their trough in March, and analysts say the gains could continue.

JP Morgan Chase analysts wrote in a note: “While the collapse in economic activity is historic, so too is the global policy response to cushion the impact and support a recovery.

“We expect risky assets to continue to recover as economies reopen.” 

But some analysts advised caution against underestimating the depth of the economic crisis, with Michael Hewson at CMC Markets observing that “it almost appears that the worse the US data is, the higher stocks seem to go”.

– ‘Eye-watering’ –

Neil Williams at investment manager Federated Hermes, calling the US payroll data “eye-watering”, said that even if some job losses were temporary “it will be a tough ask delivering the V-shape GDP recovery the optimists crave”.

Bullish sentiment had earlier seeped into Asia, lifted by strength on Wall Street the previous day, with Tokyo soaring 2.6 percent.

In Europe, London’s closure for VE Day took much of the usual volume out of the trading day, but Paris and Frankfurt were open and up by around one percent by the midafternoon.

News that China and the US had committed to implementing a partial trade deal that was signed off in January and brought a pause to their debilitating trade war also provided much-needed support to markets.

“That will be of substantial relief to markets, as the last thing the world economy needed right now, was an escalation in hostilities on that front,” said OANDA’s Jeffrey Halley.

The easing of lockdowns also provided a boost to beaten-down oil markets.

“People are getting back in cars to commute or merely to get out of the house, which is excellent for gasoline demand as that is providing the first phase in bounce to the oil price recovery,” said Stephen Innes of AxiCorp.

– Key figures around 1330 GMT –

London – FTSE 100: Closed for a holiday

Frankfurt – DAX 30: UP 1.2 percent at 10,889.43 

Paris – CAC 40: UP 1.0 percent at 4,545.47

EURO STOXX 50: UP 0.8 percent at 2,904.40

New York – Dow: UP 1.3 percent at 24,180.36

Tokyo – Nikkei 225: UP 2.6 percent at 20,179.09 (close)

Hong Kong – Hang Seng: UP 1.0 percent at 24,230.17 (close)

Shanghai – Composite: UP 0.8 percent at 2,895.34 (close)

West Texas Intermediate: UP 2.8 percent at $24.21 per barrel

Brent North Sea crude: UP 1.8 percent at $29.99 

Euro/dollar: UP at $1.0832 from $1.0829 at 2050 GMT 

Dollar/yen: UP at 106.70 yen from 106.26 yen

Pound/dollar: UP at $1.2366 from $1.2360 

Euro/pound: DOWN at 87.59 pence from 87.60 pence

burs-jh/pma

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.