Stocks Rally despite Global Tensions


Asian and European stocks mainly rallied Monday as investors shrugged off violent anti-racism protests in the United States, and simmering tensions with China over Hong Kong.

In European afternoon trade, London was up 1.3 percent, Madrid gained 1.8 percent, Milan rose 1.3 percent and Paris added 1.4 percent, while Frankfurt was shut for a holiday.

The euro scored another two-month peak at $1.1154 before paring gains.

Beijing warned Washington on Monday of retaliation, after Trump announced restrictions on Chinese students in the United States in protest against a new national security law in Hong Kong.

Hong Kong spearheaded an Asia rally after Trump fell short of imposing strict measures against China, while markets also won support from easing coronavirus lockdowns.

However, violent anti-racism protests across the U.S. have fueled worries of a pick-up in virus infections.

On Sunday night, police fired tear gas to try to disperse protesters outside the White House.

- 'Investors ignoring risks' -

"Investors are continuing to largely ignore the escalating U.S.-China tensions, the global recession and ongoing riots in the U.S., among other risks," said analyst Fawad Razaqzada at trading site ThinkMarkets.

"Sentiment remains supported due to the easing of lockdown measures and because of ongoing central bank support."

The COVID-19 outbreak is widely expected to tip the world economy into deep recession this year despite vast stimulus from governments and central banks.

On Thursday, the European Central Bank is tipped to unveil hundreds of billions in new bond-buying to get the region through the pandemic crisis, just as EU leaders try to hammer out a joint response.

"After surging over the past two weeks, some might wonder where the next big driver for upside in Europe will come from," noted IG analyst Chris Beauchamp.

"But with an ECB meeting looming there is the potential for another boost to the central bank's easing program, in tandem with the push at government level for a pan-eurozone recovery fund."

Observers are keeping tabs on the release later in the week of key U.S. jobs data that will provide a fresh snapshot of the economic damage inflicted by the shutdowns.

Dealers had sold stocks Friday ahead of a news conference Trump called regarding China's planned security law for Hong Kong, but his actions were not as severe as feared.

The president said he would strip several of the city's special privileges and bar some Chinese students from US universities.

He also ordered probes into Chinese companies listed on US financial markets.

Hong Kong's Hang Seng Index jumped more than three percent, having spiraled last month after China proposed the new law which some fear could lead to the end of the city as a key financial hub.

- Key figures around 1200 GMT -

London - FTSE 100: UP 1.3 percent at 6,154.10 points 

Paris - CAC 40: UP 1.4 percent at 4,760.07 

Milan - FTSE MIB: UP 1.2 percent at 18,415.93 

Madrid - IBEX 35: UP 1.8 percent at 7,223.30 

Frankfurt - DAX 30: UP 1.65 percent at 11,586.85 (Friday close) 

EURO STOXX 50: DOWN 0.6 percent at 3,075.76 

Tokyo - Nikkei 225: UP 0.8 percent at 22,062.39 (close)

Hong Kong - Hang Seng: UP 3.4 percent at 23,732.52 (close)

Shanghai - Composite: UP 2.2 percent at 2,915.43 (close)

New York - Dow: DOWN 0.1 percent at 25,383.11 (close)

Brent North Sea crude: UP 0.1 percent at $37.88 per barrel 

West Texas Intermediate: DOWN 0.6 percent at $35.28 per barrel 

Euro/dollar: UP at $1.1136 from $1.1101 at 2100 GMT 

Dollar/yen: DOWN at 107.44 yen from 107.83 

Pound/dollar: UP at $1.2402 from $1.2343 

Euro/pound: DOWN at 89.77 pence from 89.94 pence

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