World shares jump as markets ignore US-China tensions

US-China war of words

While largely reiterations of past comments, they helped offset the war of words between Washington and Beijing over trade, the coronavirus and China’s proposals for stricter security laws in Hong Kong.

“US-China tensions continue to simmer in the background, but equity investors appear more interested on the prospect of economies reopening around the globe,” said Rodrigo Catril, a senior forex strategist at NAB. “On this score, Japan ended its nationwide state of emergency, Spaniards have returned to bars in Madrid wearing masks, and England will reopen some businesses on June 1.”

In addition, Germany wants to end a travel warning for tourist trips to 31 European countries from June 15 if the coronavirus situation allows, the news agency dpa reported.

Bond investors suspect economies will still need huge amounts of central bank support long after they reopen and that is keeping yields low even as governments borrow much more.

Yields on US 10-year notes were trading at 0.67% after rising to 0.68% last week, when the market absorbed a wave of new issuance. The decline in US yields might have weighed on the dollar but with rates everywhere near or less-than zero, major currencies have been holding to tight ranges.

The dollar was up against the yen at ¥107.80, still within the ¥105.97 to ¥108.08 band that has lasted since the start of May. The euro gained to $1.0939, having spent the month so far between $1.0765 and $1.1017.

Against a basket of currencies the dollar was 0.2% lower at 99.620, but still sandwiched between support at 99.001 and resistance around 100.560.

Analysts at CBA felt the dollar could break higher should China-US tensions actually threaten their trade deal. “Though not our central scenario, if the US or China were to withdraw from the phase one deal, the dollar would sharply appreciate while Chinese yuan renminbi, australian dollar and New Zealand dollar would decline,” they wrote in a note to clients.

In commodity markets, gold edged up 0.2% to $1,733 an ounce.

Oil prices were supported by falling supplies as Opec cut production and the number of US and Canadian rigs dropped to record lows for the third week running. Brent crude futures rose 71c to $36.24 a barrel. US crude gained $1.14 to $34.39.

Reuters