European shares opened higher on Monday after a resurgence of the risk-on tone sent US indices to historical highs before yesterday’s closing. Despite the coronavirus death toll having risen above 1000, investors have been reassured by the slowing of the number of new cases. Furthermore, investors also welcomed the fact that a candidate vaccine has been tested on animals according to the Chinese Centre for Disease Control and Prevention. Even if this vaccine is still at very early stages of its development, it remains positive news for the fight against the deadly virus and will certainly boost market sentiment in the coming days and weeks.
Finally, investors may also be pricing a dovish speech from the Jay Powell later today as the Fed Chairman is expected to give his view on the impact the coronavirus has had on global growth. However, a rate cut, which has been suggested by certain members as a short-term adjustment policy, remains very unlikely at this stage.
Photo by Ryan Quintal.
Carmakers and miners have helped drive the Euro Stoxx-600 higher today while the DAX-30 Index is flirting with historical highs near 13,600pts. The FTSE-100 benchmark is the best performer so far and is now trading above the 7,500pts level. The market will have to clear the 7,515pts to 7,540pts zone in order to unlock a new bullish potential towards 7,585pts and 7,630pts.
