Stocks ripped higher in overnight trading. The Euro Stoxx 50 index closed up almost 2%, putting the US S&P 500’s gain of 1.5% in the shade. Bonds and gold tumbled as investors shrugged off coronavirus concerns. Stronger US factory orders and solid company reports underpinned the rally, although the optimism failed to lift industrial commodities.
Global investors appear to view the coronavirus as no threat to the economic outlook, despite the ongoing exponential rise in new infections. Stock volumes rose as buyers committed to buying the dip, and major indices are once again headed toward all-time highs. The US dollar rose as confidence returned.
West Texas Intermediate crude oil slipped below $50 a barrel for the first time in 12 months. Base metals regained some lost ground, but iron ore markets remain under pressure. The contrast between industrial commodities and share markets needs resolution.
Asia Pacific futures markets point to strength across the region today. The RBA governor speaks today in Sydney, and may further explain the more hawkish tone of yesterday’s statement that accompanied the decision to hold interest rates steady.