Global stocks hit three-month highs on economic recovery hopes – as it happened (2024)

Global stock markets are marching higher, cheered by better-than-expected economic news in the US, Europe and China which boosted hopes of economic recovery from the Covid-19 crisis. Markets have shrugged off the growing protests against police brutality in the US after the killing of George Floyd in police custody. The protests have been largely peaceful, despite a forceful police response.

Oil prices also rallied to three-month highs, with Brent crude rising above $40 a barrel, before falling back as doubts crept in over the timing and scale of a potential extension of production cuts agreed between the Opec cartel and its allies.

Gold and silver prices, which rallied at the start of the week amid safe-haven buying, fell, with spot silver down 3% to $17.49 an ounce.

We are closing for the day, and will be back from 8am tomorrow. Good-bye!

Global stocks are extending gains on the news.

• UK’s FTSE 100 index up 2.14% to 6,352
• Germany’s Dax up 2.7% to 12,345
• France’s CAC 40 up 2.48% to 4,979
• Italy’s FTSE MiB up 2.99% to 19,537
• Dow Jones up 0.92% to 25,979
• Nasdaq up 0.57% to 9,663
• S&P 500 up 0.78% to 3,104

This compares with 41.8 in April. The UK and European services PMIs were also revised higher, even though they indicated further contraction, while China’s services index jumped to the highest in nearly 10 years and pointed to growth.

The closely-watched US non-manufacturing index from the Institute for Supply Management is out. It’s better than expected at 45.4, inching closer to the 50 mark that divides contraction from expansion.

The US services business activity index from IHS Markit posted 37.5 in May, up from April’s record low of 26.7 and slightly higher than the flash estimate of 36.9. Any reading below 50 indicates contraction. This means the downturn in services eased last month as some businesses returned to work, but was still the second-biggest decline since data collection began in October 2009.

We are waiting for the more important ISM survey, out in four minutes.

The opening bell has rung on Wall Street.

• Dow Jones up 230 points, or 0.9%, at 25,973
• Nasdaq up 41 points, or 0.4%, at 9,649
• S&P 500 up 22 points, or 0.7%, at 3,102

The ADP figures come before Friday’s official non-farm payrolls numbers.

ADP says:

The National Employment Report uses the same time period the Bureau of Labor and Statistics uses for their survey. As such, the May NER does not reflect the full impact of Covid-19 on the overall employment situation.

Even so, the much smaller-than-expected rise in unemployment in May, by 2.76m, should cheer financial markets. It is another big number, but nowhere near April’s revised figure of 19.6m job losses.

European stock markets continue to march higher. The FTSE 100 index in London is now 1.2% ahead, while Germany’s Dax and Italy’s FTSE MiB have each gained 2.3% and France’s CAC 40 is 1.97% higher.

Large businesses (with 500 or more employees) accounted for the bulk of the job cuts, shedding 1.6m. The service sector was worst affected with almost 2m job losses, and 794,000 factory workers also lost their jobs. You can read the report here.

The latest US jobs numbers from ADP are out. They show 2.76 million people lost their jobs in the private sector in May, compared with 19.6 million in April, which was the worst in the survey’s history.

Economists had expected up to 9m job losses.

In other travel news, Spain is working on plans to open its borders to tourists from lower-risk Covid-19 countries, possibly as early as 21 or 22 June, according to its tourism ministry.

Spain is due to lift its state of emergency on Sunday, 21 June, and could reopen its borders around that time -- earlier than the previously targeted date of 1 July. Reuters reported a tourism ministry spokesman as saying:

We want to reactivate and accelerate international mobility but starting with areas in epidemiological situations.

Here is our story about Tui’s compensation deal with the US aircraft maker Boeing, Lufthansa’s first-quarter losses and Wizz Air’s full-year profit.

The global MSCI index, which tracks shares in 49 countries, is still trading at a three-month high, up 1.14%.

Stock markets are still pushing higher, lifted by economic optimism.

• UK’s FTSE 100 index up 63 points, or 1.02%
• Germany’s Dax up 2.23%
• France’s CAC 40 up 1.83%
• Italy’s FTSE MiB up 2.08%

US stock futures are pointing to a higher open on Wall Street later. The Dow Jones is seen opening 175 points higher, and the Nasdaq is expected to gain some 33 points at the open.

The Bank of England has issued a statement following the earlier Sky News report that governor Andrew Bailey has told banks to step up preparations for the possibility of a no-deal Brexit at the end of the transition period on 31 December.

The central bank said:

It is fundamental to the Bank of England’s remit that it prepares the UK financial system for all risks that it might face. In performing that role, the governor meets the leadership of UK banks on a very regular basis. As we have said previously, the possibility that negotiations between the UK and EU over a future trading relationship might not conclude in a deal is one of a number of outcomes that UK banks need to prepare for over the coming months.

Oil prices are now falling, after rallying to three-month highs earlier. Brent crude is down 1.62% at $38.93 a barrel after rising through $40 a barrel, while US crude has lost 1.77% to $36.16 a barrel.

Saudi Arabia, the world’s largest oil producer and the leader of the Opec oil cartel, and Russia, which is not in Opec, have reportedly reached a preliminary agreement to extend the existing record oil production cuts by one month.

Sources told Reuters:

Any agreement on extending the cuts is conditional on countries who have not fully complied in May deepening their cuts in upcoming months to offset their overproduction.

The Opec+ group, which includes Russia, agreed last month to cut output by a record 9.7m barrels a day, equivalent to about 10% of global output.

But there are now doubts as to whether an early meeting of Opec and its allies to extend the production cuts will take place tomorrow, pushing oil prices lower. Bloomberg reported that the meeting won’t happen unless problems around compliance are resolved.

Zoom, the booming video conferencing firm, reported its first-quarter results last night. My colleague Mark Sweney has taken a closer look.

Zoom may be booming as the global coronavirus lockdown moves work and social life to cyberspace but deep-pocketed rivals including Microsoft, Google and Facebook are taking aim as video conferencing becomes a staple of daily life.

On Tuesday, Zoom, which has been catapulted from a relatively unknown video service to a household name during the coronavirus pandemic, reported first-quarter results that were impressive on almost every measure.

Revenue surged by 169% to $328m (£261m) in the three months to the end of April, prompting the company to double revenue guidance for this year. The number of people attending meetings and gatherings on any one day peaked at 300 million in April. In December it was 10 million a day.

One analyst called Zoom’s results “one of, if not the greatest quarter in enterprise software history” and its share price enjoyed an initial bounce. However, Zoom’s stock dropped in after-hours trading on Tuesday as investors and analysts began to worry about its ability to cope with competitors aiming to muscle in on the video-conferencing boom.

In March, Microsoft, an aggressive competitor against Zoom for paying business customers with Microsoft Teams, announced it is to launch a version of its video-conferencing service for consumers.

The following month, Facebook, the world’s biggest social networking site, introduced a group video-calling feature called Messenger Rooms that prompted a dip in Zoom’s share price. In April, Google announced it was to make Meet, another Zoom competitor in the business video market, available for consumer use.