Crude oil prices and a gauge of global equity markets edged higher on Monday as lockdowns eased, with the Nasdaq setting a record closing high, but sentiment remained tenuous as coronavirus infections continued to rise.
The dollar fell and higher risk currencies, including the Australian dollar, jumped as investors weighed improving economic data against the prospect of new business shutdowns if a second wave of the pandemic gains force.
Gold prices climbed 1% to hit the highest in more than a month as investors took refuge in the safe-haven.
Coronavirus cases are soaring in several major countries, with “worrying increases” in Latin America, especially Brazil, the World Health Organization said. More than 183,000 new cases around the world were reported on Sunday, the biggest daily tally since the outbreak started in December, WHO chief Tedros Adhanom Ghebreyesus said.
Bullish investors have a lot to prove in terms of further gains in the absence of continued good news in economic data, said Carlton Neel, chief executive officer of investment research firm Chaikin Analytics in Philadelphia.
“On one hand, the bulls have made their case for the fact that the opening up is going much better than expected. Yet the bears are looking at the number of cases that are starting to skyrocket,” Neel said. “There is a risk to the market that we have come a long way very quickly.”
MSCI’s broadest index of shares across the globe rose 0.36% and has gained more than 40% since its March lows on hopes that the worst of the pandemic was over.
But emerging market stocks lost 0.08% and the pan-European STOXX 600 index closed down 0.76% on signs of a resurgence in coronavirus cases in Germany.
The German reproduction rate jumped to 2.88 on Sunday, taking infections above the level needed to contain it over the longer term. The number was a sharp increase from 1.06 on Friday, according to the Robert Koch Institute.]
The number of patients in U.S. hospitals being treated for COVID-19 has been on a consistent decline since its peak in April, dropping to fewer than 30,000 from more than double that two months ago, asset manager Glenmede said.
“The continuing-to-decline hospitalization rate is more positive than the rising-case-count data is negative,” said Jason Pride, chief investment officer of private wealth at Glenmede.
On Wall Street, the Dow Jones Industrial Average rose 153.5 points, or 0.59%, to 26,024.96 and the S&P 500 gained 20.12 points, or 0.65%, to 3,117.86. The Nasdaq Composite added 110.35 points, or 1.11%, to 10,056.48, a record close, as shares of Apple Inc hit an all-time peak.
Investors nonetheless edged into perceived safe-haven assets like U.S. government bonds. Benchmark 10-year U.S. Treasury notes rose 0.1 basis point to yield 0.7102%.
The dollar index fell 0.659%, with the euro up 0.75% to $1.1259. The Japanese yen strengthened 0.07% versus the greenback at 106.91 per dollar.
Credit rating agency Moody’s warned that the stimulus measures will leave advanced economies with much higher debt than they accumulated during the last financial crisis.
“Government debt/GDP ratios will rise by around 19 percentage points, nearly twice as much as in 2009 during the (global financial crisis)… the rise in debt burdens will be more immediate and pervasive, reflecting the acuteness and breadth of the shock posed by the coronavirus,” Moody’s said.
Oil rose about 2% on tighter supplies from major producers and as coronavirus lockdowns continued to ease, but gains were capped by worries that a worldwide rise in new infections might stall a recovery in fuel demand.
Brent oil futures, the international benchmark, rose 89 cents to settle at $43.08 a barrel. U.S. crude futures settled up 71 cents at $40.46.
U.S. gold futures settled 0.8% higher at $1,766.40 an ounce.