Coronavirus: Markets rebound despite US unrest as fears ease over China tensions

Tom Belger
Finance and policy reporter
A protester holds a sign as he marches to Trump Tower during a protest over the death of George Floyd in Chicago on 30 May. (Nam Y Huh/AP)

European stock markets rebounded on Monday as fears eased over US-China tensions, despite the wave of unrest sweeping the US.

Expectations of a new round of bond-buying by the European Central Bank as it meets this week and reports of plans for new stimulus in Germany also lifted investors’ mood in Europe. The German newspaper Bild am Sonntag reported the government was working on a package worth up to €80bn (£72bn, $89bn).

The FTSE in London was trading 1.4% higher (^FTSE) and France’s CAC 40 (^FCHI) was up 1.5% in early trading. Markets were closed for a public holiday in Germany.

It came after Asian stocks hit a three-month high on green shoots in Chinese economic data and US president Donald Trump’s threats to China proving less severe than anticipated. Investors were relieved Trump did not warn over the US first-stage trade deal with China in a press conference as he reacted to its authoritarian legislation in Hong Kong on Friday.

READ MORE: Coronavirus, dire data and political unrest as markets brace for turbulence

Hong Kong’s Hang Seng index (^HSI) jumped 3.4% overnight, while China’s Shanghai Composite (000001.SS) rose 2.2% and Japan’s Nikkei 225 index (^N225) rose 0.8%. An official business survey in China showed an improving picture in services and construction sectors, though factory output growth slowed, according to Reuters.

US stocks also looked set to open slightly higher, with S&P 500 futures (ES=F) up 0.2%, Dow Jones futures (YM=F) up 0.4% and Nasdaq futures (NQ=F) flat.

The stock rebound came in spite of a wave of protests and rioting in the US over the death of George Floyd, and marks a continuation of the rally since March despite the global economic crisis sparked by COVID-19.

Shafali Sachdev, head of FX Asia at BNP Paribas Wealth Management in Singapore, said: "The market is basically treating (the demonstrations) as an internal matter at the moment.”

He told Reuters: “At this point the market is more focused on the press conference that came out on Friday. I think that's been a big driver and continues to be this morning, because after a week of so much speculation about the US-China trade deal, the lack of any serious surprises has been enough to drive a relief rally."