World stocks were just shy of three-month highs and the dollar weakened further on Monday as optimism on economies opening up boosted risk appetite, shrugging off worries over riots in the U.S. and unease over Washington’s power struggle with Beijing.
After having risen a whopping 35% from a late March trough, stocks were set to kick off June with more gains. The MSCI all country world stocks index has covered two-thirds of the losses it incurred in the aftermath of the coronavirus outbreak.
Monday’s gains were also lifted by relief that while President Donald Trump began the process of ending special U.S. treatment for Hong Kong to punish China, he left their trade deal intact.
European stocks opened 1% higher led by virus-hit sectors such as travel & leisure, banks and miners but volumes were subdued as Germany, Switzerland and Austria were closed for holidays.
The Trump rhetoric against China and trade impediments against Hong Kong could have been a lot worse, hence the performance of those markets this morning, which has helped the risk backdrop for the European open,” said Chris Bailey, European strategist at wealth manager Raymond James.
The safe-haven dollar .DXY, meanwhile, hit an 11-week low dented by risk-on mood among investors and riots in major U.S. cities over race and policing.
“I agree the riots are not good but the perception is that this is a local issue…and the uncertainty has spilled over into a lower dollar,” Bailey added.