Stocks Rally on a Flood of Stimulus; Havens Slump

Stocks rallied, while Treasuries and the dollar fell as investors focused on govenment stimulus and shrugged off an upcoming U.S. jobs report that is expected to show the highest unemployment since the 1930s.

Airlines, cruise ship operators and hotels led gains among European equities as investors scooped up beaten-up shares. The Stoxx 600 Index is heading for its best week in two months and the euro has rallied for nine days, the longest winning streak since 2004.

Oil looked set for its sixth weekly gain after OPEC+ reached a tentative agreement to extend record production cuts.

Enthusiasm for risk assets was back in the markets on Friday as investors bet on a global economy awash with stimulus. Fiscal and monetary aid measures from Frankfurt and Berlin exceeded expectations this week, and reports showed that Trump administration officials increasingly expect to spend up to $1 trillion in the next round of stimulus.

In the background, trade tensions between the U.S. and China appear to be cooling. The pandemic also shows signs of easing in some countries, but continues to spread, adding about 100,000 cases a day. All eyes now turn to Friday’s U.S. unemployment report, which traders will scrutinize for signs that the labor market has bottomed.

Futures on the S&P 500 Index gained 1% as of 9:18 a.m. London time. The Stoxx Europe 600 Index rose 1.3%. The MSCI Asia Pacific Index climbed 0.7%. The MSCI Emerging Market Index increased 0.8%.

Currencies
The Bloomberg Dollar Spot Index fell 0.4%. The euro climbed 0.1% to $1.1349. The British pound jumped 0.5% to $1.2657. The onshore yuan strengthened 0.3% to 7.09 per dollar. The Japanese yen weakened 0.2% to 109.33 per dollar.

Bonds
The yield on 10-year Treasuries jumped three basis points to 0.85%. The yield on two-year Treasuries climbed less than one basis point to 0.20%. Germany’s 10-year yield gained two basis points to -0.30%. Britain’s 10-year yield rose two basis points to 0.328%. Japan’s 10-year yield increased one basis point to 0.05%.

Commodities
West Texas Intermediate crude gained 1% to $37.77 a barrel. Brent crude gained 1.5% to $40.60 a barrel. Gold weakened 0.2% to $1,710.31 an ounce.

Stocks Rally on a Flood of Stimulus; Havens Slump, Bloomberg, Jun 5