Global stocks rise as investors digest the ECB’s huge new stimulus package and await US jobs data

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Reuters

  • Most global stocks are green on Friday as they digest a bigger than expected ECB stimulus package of $676 billion to fight COVID-19. 
  • The S&P 500 and the NASDAQ closed lower on Thursday the first time since US protests began last week, due to weak initial jobless claims data, which showed two million more Americans filing for unemployment.
  • The euro to US dollar rose about 0.9% to 1.1335 after the ECB announcement. 
  • But analysts said equities could move sideways with US Non-Farm Payroll data due later on Friday. 
  • Oil prices rose as the OPEC+ may end up meeting as soon as today after Thusday’s meeting got cancelled over compliance issues. 
  • Visit Business Insider’s homepage for more stories.

Global stocks jumped on Friday, reversing some losses seen from the previous session as a major ECB package poured positive sentiment into global markets.

The ECB announced a $676 billion package of new monetary stimulus to fight the coronavirus, bringing its total Pandemic Emergency Purchase Programme to $1.5 trillion on Thusrday. Most market participants were only betting only a $567 billion increase. 

Jeffrey Halley, senior market Analyst, Asia-Pacific at OANDA said: “Having set new records on the bleep test earlier this week, equity markets, in particular, appear to be taking a longer cardiovascular recovery today.”

Naeem Aslam, chief market analyst at Avatrade said: “European markets are trading solidly higher despite another feeble reading of German factory order data. Investors are more optimistic about the ECB dovish monetary policy.”

Halley said: “The big winner overnight was the Euro as the ECB vastly increased its bond-buying programme to support growth. The EUR/USD jumped 0.95% to 1.1335 after the ECB announcement, a three-month high.

Here’s the market roundup as of 11.25 a.m. in London (6.25 a.m. ET):

  • Asian indexes rose with Hong Kong’s Hang Seng up 1.7% , China’s Shanghai Compositeup 0.4%, and Japan’sNikkei up 0.74%.
  • European equities rose, with Germany’s DAXup 1.2% Britain’sFTSE 100up 0.9% and theEuro Stoxx 50up 1.6%.
  • US stocks are set to open higher. Futures underlying theDow Jones Industrial Averageare up 1%, theS&P 500is up 0.6%, and the Nasdaqis up 0.25%. 
  • Oil prices rose.West Texas Intermediaterose 2.4% at $38.30 a barrel  andBrentrose 3% to $41.19 a barrel. 
  • The benchmark 10-year Treasuryyield rose to 0.85%.
  • Goldfell 1.1% to $1708 er ounce. 

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On Thursday, theDow 30and theNasdaqclosed lower for the first time since widespread protests began across the US.

This came even though the Nasdaq surged to a new intraday record in Thursday trading, becoming the first major US stock index to retrace its coronavirus decline. 

But all three US indices were pointing to a positive open on Friday. 

Halley said: “I note that the NASDAQ has now risen by some 47% from its mid-March lows. I am not alone in my sense of disbelief, or my reluctance to fully embrace the greatest comeback ever.

“Perhaps even greater than the Eagle’s Hell Freezes Over album? The fact though so many investors share my doubts, is one of the primary reasons that equity markets will continue to be illogically unreasonable. Engagement in the stock rally is nowhere near 100%,” he added. 

US Non-Farm Payrolls data

Investors are awaiting the US Non-farm payrolls report for May due later on Friday, a closely watched statistic for how many people are employed in the US. The report will drop at 8.30 a.m. ET (1.30 p.m. UK time)

Halley said: “Today’s Non-Farm Payrolls will likely disappoint following the Jobless Claims data. We expect Non-Farm payrolls to shrink by 8.8 million jobs – vastly better in a perverse market-driven way – than last month’s -20.5 million jobs.”

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US jobless claims for the week that ended on Saturday totaled 1.9 million, the Labor Department said Thursday. That slightly exceeded the median economist estimate.

Further, continuing claims – which reflect the aggregate number of Americans receiving unemployment benefits – were 21.5 million, more than economists expected and an increase from the previous week. 

In the FX market, the Australian dollar made further gains against the US dollar. As of 6.25 a.m. ET, the Austalian dollar to US dollar exchange rate is up 0.4% at 0.6971. 

Oil prices were up amid reports that the OPEC+ could hold a virtual meeting as early as today on production cuts. The meeting had initially been scheduled for Thursday, but concerns on lack of compliance by countries such as Iraq and Nigeria prompted the meeting to not happen. 

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