People in Hong Kong have returned to the city’s streets, albeit in masks. Concerns over economic recovery world-wide have tempered investor appetite a recent market rally.
Photo: anthony wallace/Agence France-Presse/Getty ImagesInternational markets and U.S. stock futures rose, as investors continued to assess the pace of economic recovery.
The Stoxx Europe 600 benchmark ticked up 1% early Friday. In Asia, the Shanghai Composite gained 0.4%, Hong Kong’s Hang Seng benchmark rose 1.4% and South Korea’s Kospi rallied 1.4% too.
Stock futures tied to the S&P 500 gained 0.9% ahead of the opening bell in New York.
On Thursday, the S&P 500 broke a four-session winning streak as disappointing trade and job data showed the coronavirus pandemic’s continued toll on the economy.
Equity markets and the broader economy are disconnected, said Daryl Liew, chief investment officer at REYL Singapore.
The recent stock-market surge was partly driven by massive stimulus, plus optimism over “the loosening of restrictions across the world and the expectations that we could see a V-shaped recovery,” he said.
“However, we haven’t really seen that in the broader economy yet,” Mr. Liew added. He said if business activity doesn’t rebound by the third quarter, “governments might have to do more because otherwise you’re going to see a flood of bankruptcies and insolvencies.”
Mr. Liew said he was holding more cash after reducing his holdings of shares because of uncertainties including potential new waves of coronavirus infections in some countries, and escalating U.S.-China tension ahead of the U.S. presidential election in November.
Lewis Wan, chief investment officer at Pride Investments Group, said he was cautious on equities following a global rebound. In dollar terms, the MSCI All Country World Index had jumped 38% as of Thursday, compared with its low on March 23, according to FactSet.
“We’re probably going to see more volatility in equities until there’s more certainty over the development of vaccines,” and the U.S.-China relationship stabilizes, he said. Mr. Wan said any resurgence in coronavirus infections could damage fragile investor confidence.
The dollar continued to weaken, with the WSJ Dollar Index, which measures the U.S. currency against 16 others, declining 0.3% to 90.98. It hasn’t settled below 91 since early March.
Write to Joanne Chiu at joanne.chiu@wsj.com and Avantika Chilkoti at Avantika.Chilkoti@wsj.com
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June 05, 2020 at 02:00PM
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