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AFP
May 28, 2020

Global stocks rise as lockdown measures ease further

Business

AFP
May 28, 2020

London: Global stock markets rose on Wednesday as more easing of coronavirus lockdowns created a positive buzz on trading floors, analysts said.

Investors on both sides of the Atlantic mostly brushed aside deteriorating China-US relations and the impact of Hong Kong protests, they reported.

"The market is reacting positively to coronavirus lockdowns being eased across the globe," said Stephen Innes, chief global markets strategist at AxiCorp.

Adding to optimism was a proposal by European Union chief Ursula von der Leyen for a 750 billion euro ($825 billion) post-virus recovery fund for Europe.

If she can win over sceptical member states to push it through, the stimulus package will be the biggest in EU history, adding to already mind-boggling amounts of stimulus and central bank pledges of support across the planet.

"The announcement gave European shares another lift earlier with the number being proposed larger than what Germany and France previously agreed," OANDA analyst Craig Erlam told AFP.

On Wall Street, the Dow Jones index was up more than 300 points in early business, while Europe´s key markets added up to two percent.

A warning from French statistics bureau INSEE that France´s economy could contract 20 percent in the second quarter on the virus lockdown had little impact.

Asian stocks mostly slid -- Hong Kong falling the hardest as police fired pepper-ball rounds on anti-China protesters, with investors fearing the demonstrations could erupt into the worst unrest since last summer.

Markets are also fretting over reports that the US has warned it will impose sanctions on Chinese entities and officials if it goes ahead with a sweeping national security law.

"Despite fears of the implications for Hong Kong in the event that the controversial Chinese security bill is passed, markets are understandably aware of the potential consequences for US-China relations," Mahony added.

Concerns about the growing crisis have weighed on the yuan, which has lost almost three percent this year, with observers suggesting it could hit a record low.

"European markets are maintaining their positive mindset today despite ongoing fears over an impending breakdown in relations between the US and China," Mahony said.

"The threat of (Hong Kong) protests and potential US action is likely to drive underperformance for Asian stocks throughout the week, but European indices do seem to be more concerned with events closer to home."

The broad trend across global markets has been upward for weeks as virus deaths and infections ease in most countries and governments begin to reopen their battered economies, fanning hopes for a recovery in the second half of the year.

However, there was little fresh desire for risk assets with eyes on the simmering row between the world´s top two economies, fuelled by Donald Trump´s barracking of China over its role in the pandemic, and made worse this week by Beijing looking to tighten its grip on Hong Kong.

"Despite fears of the implications for Hong Kong in the event that the controversial Chinese security bill is passed, markets are understandably aware of the potential consequences for US-China relations," added Mahony.