By Barbara Kollmeyer, MarketWatch
AFP via Getty Images
European stocks pushed higher on Wednesday, as hopes for global stimulus continued to drive gains, even amid worrying coronavirus outbreaks in Beijing and the U.S., and rising geopolitical tensions between China and India and the two Koreas.
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP -0.52% rose 0.9% to 366.91, after closing up 2.9% on Tuesday, the biggest one-day percentage gain since May 18. The German DAX /zigman2/quotes/210597999/delayed DX:DAX -0.35% gained 0.7% and the French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -0.23% rose 1.2%. The FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -0.51% gained 0.7%.
U.S. stock futures indicated modest gains for Wall Street at the open, with those for the Dow Jones Industrial Average /zigman2/quotes/210407078/delayed YM00 -0.42% up 0.2%. Tuesday’s session in the U.S. saw the Dow /zigman2/quotes/210598065/realtime DJIA -0.28% climb 536 points, boosted by strong retail sales data, but off its best levels after Federal Reserve Chairman Jerome Powell suggested more fiscal stimulus may be needed as the U.S. recovery from the pandemic would be slow.
Reports that the administration of U.S. President Donald Trump is preparing a $1 trillion infrastructure plan continued to juice markets a little, though analysts said the delivery of such a package before the November election was unlikely. News of a potential treatment for some seriously ill COVID-19 patients also continued to inspire investors.
Investors were keeping a close eye on rising coronavirus infection rates across parts of the U.S., as well as a worrying outbreak in Beijing. Chinese officials have reportedly cut 60% of flights to stem the virus’s spread and raised the alert level, leading to classes being canceled and expanded local lockdowns in the area.
“A lockdown of Beijing would be a Wuhan on steroids, being a governmental and commercial center of China, and much more massive on any measure then Wuhan,” said Jeffrey Halley, senior market analyst, Asia Pacific, at OANDA, in a note to clients. “The economic implications would be profound in China, and by default, the rest of Asia.”
While global stock markets have recouped much of the year’s pandemic-led losses, concern remains that the gains have been too rapid, especially amid persistent coronavirus outbreaks.
Elsewhere, investors were keeping an eye on tensions in the Himalayas between China and India, after 20 Indian soldiers were killed in the worst clash in decades, and worsening relations between North and South Korea. The North reportedly destroyed a liaison office with the South on Tuesday.
On the economic front, Japanese exports and imports data was dismal, while European new car sales slid 57% in May, with each of the 27 member European Union states reporting double-digit declines, the European Automobile Manufacturers’ Association reported.
Among stocks to watch, shares of SSE /zigman2/quotes/204546319/delayed UK:SSE +2.23% surged more than 8%, leading the Stoxx 600 gainers, after the U.K. energy group said pretax profit fell sharply, but adjusted operating profit rose 37%. The group also declared a final dividend of 56 pence per share.
Shares of HSBC Holdings /zigman2/quotes/208272822/composite HSBC -2.78% /zigman2/quotes/203901799/delayed UK:HSBA -3.26% rose 1%. Chief Executive Noel Quinn has sent a memo to the entire global staff saying a plan to cut 35,000 jobs has been revived. The memo was first reported by Reuters and confirmed by a spokesperson from the bank.