European shares rebound, euro set for best month in a decade
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[July 31, 2020]
By Ritvik Carvalho
LONDON (Reuters) - European shares
recovered from their lowest levels in a month on Friday, as investors
looked past a severe economic contraction in Germany and on to company
earnings, while the euro reached its highest in more than two years, set
for its best month in a decade.
The pan-European STOXX 600 <.STOXX> rose 0.74%, though it was on course
to end the month flat or lower. Technology shares <.SX8P > propped up
the rally, rising 1.6% after Wall Street's tech giants, Apple <AAPL.O>,
Amazon <AMZN.O> and Facebook <FB.O>, reported forecast-beating results
overnight.
MSCI's All Country World Index, which tracks shares across 49 countries,
was up 0.1% on the day. <.MIWD00000PUS>
"Germany’s (-10.1%) and France’s ( -13.8%) numbers have already shaped
expectations around the magnitude of the 2Q slump in the aggregated
eurozone economy," ING strategists said in a note to clients.
"Markets will therefore focus on assessing the slowdown in the Italian
and Spanish economies, which were among the first and worst-hit
countries in the pandemic."
They added the euro could hit $1.20 within the next few days. The single
currency passed $1.19 on Friday. <EUR=EBS>
The dollar was set for its worst month in a decade against a basket of
currencies, as abysmal economic data for the second quarter and rising
global COVID-19 cases darkened the mood. The dollar index <=USD> dropped
0.1% to 92.699 <.DXY> [FRX/]
Expectations the U.S. Federal Reserve will maintain its ultra-loose
monetary policy for years also depressed the dollar.
U.S. gross domestic product plunged 32.9% in the second quarter, the
biggest decline on record. Jobless claims rose last week, another sign
the economic recovery has slowed.
Those figures overshadowed positive manufacturing data from China and
Japan. China's official Purchasing Manager's Index data showed that
factory activity grew in July for a fifth straight month and at a faster
pace, defying expectations of a slowdown. Japan's industrial output
snapped four months of declines in June.
Earlier in Asia, shares turned lower on Friday amid the economic data
from the United States and rising global COVID-19 cases. After rising in
early trade, MSCI's broadest index of Asian shares outside Japan
<.MIAPJ0000PUS> turned lower. It was last down 0.2%.
Australian shares <.AXJO> were down 2.04% and Seoul's Kospi <.KS11>
ticked 0.64% lower. Japan's Nikkei <.N225> dropped 2.82% as a stronger
yen weighed on exporters.
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The German share price index DAX graph is pictured at the stock
exchange in Frankfurt, Germany, July 15, 2020. REUTERS/Staff
Chinese blue chips <.CSI300> were last up 0.35% in a session that
swung repeatedly between gains and losses.
Futures continued to point to a higher open on Wall Street on
Friday. Apple <AAPL.O>, Amazon <AMZN.O>, Facebook <FB.O> and
Alphabet <GOOGL.O> reported quarterly earnings on the same day for
the first time ever, all topping Wall Street estimates.
"All of them punched the lights out with respect to their earnings
numbers," said National Australia Bank strategist Ray Attrill.
E-mini futures for the S&P 500 <ESc1> rose 0.3% and Nasdaq futures
<NQcv1> added 0.9%.
U.S. stock markets, oil prices and the dollar slid on Thursday as
the data underscored the economic impact of the coronavirus and U.S.
President Donald Trump raised the possibility of delaying the
November election.
On Wall Street, the Dow Jones Industrial Average <.DJI> fell 0.85%,
the S&P 500 <.SPX> lost 0.38% and the Nasdaq Composite <.IXIC> added
0.43%.
The dollar slumped 0.40% against the yen to 104.30 <JPY=>, while the
euro jumped 0.35% to buy $1.1888.
Crude oil recovered from an overnight slump, with global benchmark
Brent crude <LCOc1> rising 1.1% to 43.44 a barrel. U.S. light crude
added 1.25% to $40.42 per barrel.
Gold also turned higher, with spot gold <XAU=> trading 0.83% higher
at $1,975.58 per ounce, just short of record highs.
U.S. benchmark 10-year Treasury notes <US10YT=RR> yielded 0.5412%.
The two-year yield <US2YT=RR> touched 0.1152% compared with a U.S.
close of 0.121%.
Italian 10-year bond yields were set for their biggest monthly drop
since January on Friday, boosted by the recovery fund agreed by the
European Union last week.
(Reporting by Ritvik Carvalho; additional reporting by Andrew
Galbraith in Shanghai; editing by Larry King)
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