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Monday, May 25, 2020, 18:39
Stocks gain as German survey fuels optimism; dollar firm
By Reuters
Monday, May 25, 2020, 18:39 By Reuters

LONDON - Stocks edged higher on Monday after a survey showed German business morale rebounded in May, boosting optimism around economic re-openings, although caution prompted the dollar to snap a rare losing streak.

MSCI’s gauge of world stocks gained 0.32 percent. The pan-European STOXX 600 index climbed 0.8 percent.

Lockdown measures introduced in mid-March have put the global economy on track for a recession this year. Only unprecedented stimulus by global central banks held up world markets in recent weeks.

With nervous investors wary of adding to their equity holdings over concerns on what a post-lockdown world would look like, Germany’s Ifo institute survey for May gave some relief.

Its business climate index rose to 79.5 from a downwardly revised 74.2 in April, higher than a Reuters poll had forecast, and fueling optimism about the outlook of Europe’s biggest economy after a drop in the first quarter.

“Today’s Ifo index echoes more real-time signals that economic and social activity has started to pick up significantly since the first lifting of the lockdown measures in late April,” ING economists said in a note.

“In short, the low point of the slump should now be behind us and there even is the chance for a short-lived strong rebound in the coming months.”

But with financial markets in Singapore, Britain and the United States closed for public holidays on Monday, market moves were relatively small and held within well-worn ranges.

US stock futures gained 1 percent. MSCI’s index of Asia-Pacific shares outside Japan was 0.3 percent higher on thin volume.

DOLLAR GAINS

The bullishness in the stock markets contrasted with caution in currency markets, where the dollar ended a rare weekly loss to rise to a one-week high against its rivals.

Bond markets were stable with Italy’s 10-year yield at 1.60 percent, just off six-week lows hit on Friday, and safe-haven German 10-year yields down 1 basis point at -0.50 percent.

Meanwhile, US crude oil rose 32 cents, or 1 percent, to US$33.57 a barrel. Brent crude was up 9 cents, or 0.26 percent higher, at 35.22.

Spot gold was off 0.3 percent at US$1,729.2 an ounce.

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