· Wall Street ends choppy session higher as strength in banks offsets virus woes
Wall Street’s main indexes closed higher in choppy trading on Thursday, with bank stocks soaring ahead of annual stress test results and helping to offset investor jitters over alarming increases in new coronavirus cases.
The recently battered S&P 500 banks sub-index led the gainers for the session after U.S. banking regulators eased rules and investors waited for results of the sector’s annual stress test, which helps determine dividend policies.
The bank index had fallen 19 percent from its recent high on June 5 to Wednesday’s lowest point. It closed up 3.6% on Thursday.
But investors remained nervous throughout the day as the number of new virus cases in U.S. states grew, especially in the West and South.
The Dow Jones Industrial Average rose 299.66 points, or 1.18%, to 25,745.6, the S&P 500 gained 33.43 points, or 1.10%, to 3,083.76 and the Nasdaq Composite added 107.84 points, or 1.09%, to 10,017.00.
· IMF warns disconnect in financial markets risks a correction in asset prices
The International Monetary Fund has warned that the ongoing disconnect between financial markets and the real economy could lead to a correction in asset prices.
Recent data indicates a deeper-than-expected downturn, the Fund added, but markets appear unfazed: the S&P 500 enjoyed its largest 50-day rally in history in early June.
“This disconnect between markets and the real economy raises the risk of another correction in risk asset prices should investor risk appetite fade, posing a threat to the recovery,” the IMF said Thursday in its updated Global Financial Stability report.
A correction is defined as a 10% or more decline in the price of an asset or index.
The Fund said that valuations currently looked stretched across many different markets.
· European stocks close higher despite fears over rising virus cases; Wirecard files for insolvency
European stocks closed higher on Thursday despite concerns over a global economic downturn and record spike in coronavirus cases in the U.S.
The pan-European Stoxx 600 closed up by 0.9% provisionally, with auto stocks leading the gains as most sectors and major bourses finished in positive territory.
Global markets continued to digest the IMF’s latest forecast for the global economy and warning of soaring debt levels. On Wednesday, the IMF released its latest outlook in which it forecast a contraction of 4.9% in global gross domestic product in 2020, lower than the 3% fall it predicted in April.
· Asia markets edge higher as U.S. virus cases surge; China markets closed
Stocks in Asia Pacific rose in Friday morning trade as the coronavirus situation stateside continues to be monitored by investors amid concerns with cases continuing to surge.
In Japan, the Nikkei 225 rose 0.88% as shares of conglomerate Softbank Group jumped more than 1% while the Topix index shed 0.71%. South Korea’s Kospi also added 0.91%.
Meanwhile, shares in Australia traded higher, with the S&P/ASX 200 up 0.52%.
Overall, the MSCI Asia ex-Japan index traded 0.34% higher.
Markets in China are closed on Friday for a holiday.
Investor reaction to the ongoing coronavirus situation in the U.S. continued to be watched on Friday, after the country suffered its single-biggest daily coronavirus cases surge on record. More than 45,000 new coronavirus cases were confirmed on Wednesday, a record that surpassed the previous April 26 peak by over 9,000 cases, according to an NBC News tally.
Reference: CNBC, Reuters
Thai
Eng