US stocks open higher as recovery hopes outweigh tension with China
US stocks extended gains as hopes of an economic recovery and vaccine developments outweighed growing tensions with China.
The Dow Jones index was up 1.33 per cent. The S&P 500 rose 0.97 per cent to 3,015 while the Nasdaq was nudged down 0.29 per cent.
The gradual easing of lockdown restrictions, paired with optimism about a vaccine and fiscal stimulus have helped to power the recent rally in US stocks.
The National Economic Council Director Larry Kudlow yesterday indicated that the Trump administration is considering a “back to work” cash bonus to encourage unemployed Americans to return to their old jobs or seek new work.
He also expressed some optimism about economic recovery. “These signs are showing a lot more glimmers of hope and growth and the signs seem to be mounting,” Kudlow added.
US stocks are clinging to the positive iterations, despite a deterioration in US-Sino relations. In a White House briefing yesterday, President Trump indicated there will be an announcement before the end of the week as anger at China continues to mount.
Unlike US and European stocks, Asian shares retreated overnight following news that China had expanded the scope of its national security legislation against Hong Kong. The Shanghai Composite fell 0.34 per cent while Hong Kong’s Hang Seng index dropped 0.8 per cent.
“It seems that investors are not so easily frightened by rising geopolitical tensions these days,” said Raffi Boyadjian, senior investment analyst at XM.
“However, while the abundance of stimulus may provide a nice cushion to land on, the market’s behaviour raises the prospect of a sharper correction down the line should the Hong Kong row spark a much deeper crisis between the United States and China.”
The optimism that has taken told in the US matched their counterparts in Europe.
Markets were up across the board after the European Commission unveiled a €750bn stimulus package to help the bloc through the pandemic.
The European Stoxx 600 gained 0.47 per cent, while Germany’s Dax climbed 1.57 per cent. France’s Cac both jumped 1.97 per cent. The FTSE 100 is up 1.05 per cent.