Share indices roared higher on the first trading day of the week after reports of declining infection and fatality rates in key European countries, and the ending of the lockdown in Wuhan. Bonds issued by major nations sold off as investors switched back to stocks. Commodity markets eschewed the optimism. Base metals did make tepid gains, but oil slumped 7% and gold rose.

Major indices made extraordinary gains over the last twenty-four hours. It started in the Asia Pacific region. The Nikkei and the Australia 200 both rose more than 4% yesterday. Overnight, the German Dax kicked 5.8% higher, only to be outdone by 7% + gains for the Dow, SPX and Nasdaq indices. Futures markets indicate local markets will extend the gains today.

In further signs of calming markets the US volatility index fell further to 45%. While this is still unusually high, it is well below the peak reading at 85.5% from three weeks ago. CMC’s head of New Zealand, Chris Smith, noted that this is the 21st time this year that the US SPX has made a single day gain of more than 3%. This has only occurred 11 times in the previous eight years.

Despite the good news for equities, gold is signalling further distress. In the previous few weeks gold trading became disorderly as demand for physical gold surged. In what is normally a global market, regional variations arose and bid-offer spreads widened. An overnight rise in the US dollar also suggests not all investors are convinced there is an “all-clear” on the corona virus outbreak.