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US: Wall Street leads global stock rally, with Nasdaq at record high
[NEW YORK] Wall Street indices powered to a strong finish on Monday, with Nasdaq hitting a new record and the S&P 500 erasing its losses for the year despite the ongoing coronavirus tumult.
The rally in New York came after European stock markets dropped slightly amid a sell off that was driven by profit-taking but limited by positive expectations of a global economic recovery.
A similar belief in the ability of US states to return to business pushed the tech-rich Nasdaq to close more than 100 points over its previous high in February, while the benchmark Dow Jones Industrial Average finished up 1.1 per cent.
Maris Ogg, portfolio manager at Tower Bridge Advisor, said markets are "running high on people's expectation that we actually started a new bull cycle, that the economic cycle will have been revitalized by the downturn."
And "It's probably realistic," she said.
Companies hit hard by the lockdowns that sent indices tanking in March were among the big winners, with United Airlines gaining 14.8 per cent and American Airlines 9.3 per cent after both carriers said they were seeing increased demand.
Asian equities rose earlier in the day though London, Frankfurt and Paris ended mildly negative.
Nonetheless, Fawad Razaqzada, a market analyst at Thinkmarkets, said the overall mood was still positive, and "momentum in the global stock market rally is continuing to crush the bears."
And what selling there was on Monday happened because some investors "chose to take a bit of profit," said Pierre Veyret, analyst at trading group ActivTrades.
"The risk appetite remains," he said.
'PATH OF LEAST RESISTANCE'
Wall Street's newfound health contrasts with the greater malaise in the world's largest economy.
The unemployment rate stands at 13.3 per cent and on Monday and non-partisan research organization the National Bureau of Economic Research said the US recession began in February.
Between the investors who are holding back in case the recovery falters and trillions of dollars in liquidity from the Federal Reserve, Ms Ogg said Wall Street was primed to continue its climb. "The path of least resistance is still up."
Crude futures advanced earlier, after Opec members and other key oil producers agreed Saturday to extend historic output cuts of almost 10 million barrels a day for another month through to the end of July.
But the rally went into sharp reverse following reports that Saudi Arabia would not continue the additional, voluntary output reductions it had been implementing alongside the current production deal beyond the end of this month.
Keeping the voluntary reductions from Saudi, UAE and Kuwait in place while there are supply deficits would have been "too good to be true," said Bjornar Tonhaugen, an analyst at Rystad Energy.