- Global stocks rose on Tuesday on reports that President Donald Trump’s administration is considering fresh stimulus worth $1 trillion for the US economy.
- Futures tied to the S&P 500 rose 1.2%, signalling that US stocks will rise for a third consecutive day.
- US stock futures continued to track the previous day’s gains after the Federal Reserve announced it would begin purchases of up to $250 billion in individual corporate bonds.
- In Europe and Asia, stocks also jumped, with Japan’s Nikkei gaining almost 5% by the close, and most major European indexes up more than 2% in morning trade.
- “The Federal Reserve became an accidental Lone Ranger overnight, riding in to rescue beleaguered financial markets that had circled the wagons over secondary outbreak COVID-19 fears,” Jeffrey Halley, a market analyst at OANDA said.
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Global stocks jumped on Tuesday after the US Federal Reserve declared fresh economic stimulus measures and on reports that the Trump administration may be working on a $1 trillion infrastructure proposal fund to boost the US economy.
Trump’s proposal aims to set aside funds for infrastructure such as roads and bridges, but part of the funding would also be directed towards 5G wireless infrastructure and rural broadband, according to Bloomberg.
As markets were just beginning to weigh the prospect of another prolonged sell-off amid fears of a second coronavirus wave, talk of a $1 trillion infrastructure plan has “put a rocket under stocks again,” Russ Mould, investment director at AJ Bell, said.
The central bank said on Monday it would begin buying a “broad and diversified portfolio” of individual corporate bonds of up to $250 billion to support liquidity and credit for large employers.
Following the announcement, US stocks erased losses and the Fed became an “accidental Lone Ranger overnight” as it rode in to rescue distressed financial markets that were recently in the red over fears of a second coronavirus wave, Jeffrey Halley, a senior market analyst at OANDA said in a note.
Gains in global stocks continued a dramatic reversal on Monday when indexes recovered from early losses and closed higher.
As the Federal Reserve backstopped corporate credit and supported printing money to lend to companies, an immediate return to business by the “buy everything herd” was seen, Halley said.
In the UK, the benchmark FTSE 100 rose 2.3% even as data released by the Office for National Statistics showed that the jobless claimant count in the UK rose by 528,900 to 2.8 million in May.
Here’s the market roundup as of 10.20 a.m in London (5.20 a.m. ET):
- Asian indexes were up with China’s Shanghai Composite up 1.5%, Hong Kong’s Hang Seng up 2.4%, and Japan’s Nikkei up 4.8%.
- European equities rose, with Germany’s DAX up 2.6%, Britain’s FTSE 100 up 2.3%, and the Euro Stoxx 50 up 2.4%.
- US stocks are set to open higher. Futures underlying the Dow Jones Industrial Average, the S&P 500, and the Nasdaq rose between 1.1% and 1.5%.
- Oil prices rose, with West Texas Intermediate up 1.5% at $37.68, and Brent crude up 1.8% at $40.45.
- The benchmark 10-year Treasury yield rose to 0.74%.
- Gold rose 0.6% to $1,737 per ounce.
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