Global stocks rise despite stalemate on US stimulus

Stock markets rose on both sides of the Atlantic on Wednesday, August 12, as optimism about an economic recovery outweighed worries that United States lawmakers may not, after all, agree to a fresh stimulus deal any time soon.

European markets finished solidly higher, with London outperforming its peers thanks to a weaker pound. Strong German economic data had also propelled European equities higher on Tuesday, August 11.

Wall Street followed suit later, with the Nasdaq leading the major indices behind big gains by Apple, Amazon, and other tech giants.

Analysts attributed some of the advance to investor relief at former vice president Joe Biden’s selection of Kamala Harris as a running mate in the 2020 presidential election.

Investors prefer California senator Harris to other leading choices, especially Massachusetts senator Elizabeth Warren, a proponent of raising taxes on the wealthy and aggressive changes to rein in Wall Street, analysts said.

Investors are looking ahead to a meeting this week between US and Chinese officials to review their trade pact.

Tensions between the powers have had investors worried, but White House advisor Larry Kudlow said the pact was “fine right now.”

He added that Beijing had vowed to stick to its promises on the January trade deal and there was evidence it was increasing purchases. 

There was no movement on stimulus talks in Washington as US Treasury Secretary Steven Mnuchin accused Democratic leaders in Congress of playing politics, while House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer countered that the Trump administration had refused to budge on the size of the package after Democrats slashed their offer.

Pound lower

Meanwhile, the British pound slipped against the euro, and to a lesser extent the dollar, as Britain’s coronavirus-ravaged economy slid into its deepest recession on record.

Britain’s economy shrank by a fifth in the 2nd quarter, more than any European neighbor, and following two quarterly contractions in a row was officially in recession.

Losses for the pound were, however, limited by data showing British gross domestic product growth of 8.7% in June – the final month of the 2nd quarter – as the economy slowly emerged from lockdown.

“The figure for June is key, as we all knew that lockdown measures would have a big impact on the economy but what we still don’t know is how quickly the UK will rebound,” said AJ Bell analyst Laura Suter, calling the June figures “encouraging.”

Key figures around 8:40 pm GMT

• New York – Dow: UP 1.1% at 27,976.84 (close)
• New York – S&P 500: UP 1.4% at 3,380.35 (close)
• New York – Nasdaq: UP 2.1% at 11,012.24 (close)
• London – FTSE 100: UP 2% at 6,280.12 (close) 
• Frankfurt – DAX 30: UP 0.9% at 13,058.63 (close)
• Paris – CAC 40: UP 0.9% at 5,073.31 (close)
• EURO STOXX 50: UP 0.9% at 3,363.18 (close)
• Tokyo: Nikkei 225: UP 0.4% at 22,843.96 (close)
• Hong Kong: Hang Seng: UP 1.4% at 25,244.02 (close)
• Shanghai: Composite: DOWN 0.6% at 3,319.27 (close)
• Euro/dollar: UP at $1.1791 from $1.1740 at 9 pm GMT
• Dollar/yen: UP at 106.86 yen from 106.49
• Pound/dollar: DOWN at $1.3026 from $1.3048
• Euro/pound: UP at 90.48 pence from 89.98
• West Texas Intermediate: UP 2.5% at $42.67 per barrel 
• Brent North Sea crude: UP 2.1% at $45.43 per barrel

– Rappler.com