(A look at the day ahead from EMEA deputy markets editor Sujata Rao. The views expressed are her own.) For those of us who have spent more than two months at home – working, exercising, connecting with friends, all on a remote basis -- it will come as no surprise that online communications firm Zoom nearly doubled its expectations for annual sales, boosting its shares almost 5%. That should add to the Nasdaq's momentum; it's around 3% from regaining record highs.
Even leaving aside tech, markets are looking past U.S. social unrest, Hong Kong tensions and pandemic worries to focus on economic recovery. World stocks hit their highest since March, while Brent crude crossed $40 a barrel for the first time since early March.
The S&P 500 and Nasdaq posted their sixth session of gains out of seven and today Asian and European shares are up more than 1%.
Economic data shows signs of steady, albeit slow, improvement. China's May Caixin services PMI beat expectations, for the highest reading since October 2010. In another good sign, the new orders component rose to 52.9 from 48.0 in April.
The wait is on to see if Europe's final services PMIs might be revised higher. Elsewhere, Australia’s 0.3% contraction in first-quarter gross domestic product was less than predicted. Later today, U.S. ADP payrolls data should show big job losses but the figure is expected to halve from April’s 20 million decline.
The positive mood is hurting the dollar, which hasn't really recovered since last month's European Union bailout fund proposal, which finally envisaged joint debt issuance. The dollar index is down for the seventh straight session, to the benefit of currencies more geared to world growth – the Australian, New Zealand and Canadian dollars and the Norwegian crown.
MSCI's emerging currency index is at a two-and-a-half-month high; even the Turkish lira and South African rand have joined the rally. Brazil's real surged to two-year highs despite its dire coronavirus situation.
U.S. 10 year bond yields are near one-week highs and the steepening yield curve offers another positive for stock markets. The gap between five- and 30-year U.S. Treasury yields is at its highest since early 2017. German yields have risen to mid-April highs and euro zone inflation expectation are back above 1%.
We were reminded of euro zone frailties yesterday as data showed the European Central Bank scooped up all of Italy's new debt in April and May, yet 10-year Italian borrowing costs declined just four basis points over that period.
The other worry is that Donald Trump's administration seems to be pursuing new trade barriers. The United States is investigating whether imports of the metal vanadium threaten violate national security and also looking into digital-services taxes being considered by Britain, Italy, Brazil and others.
And let's not forget, about 1,600 U.S. Army troops have been moved near Washington, D.C., after several nights of violent protests.
In European stocks today, the STOXX 600 index is already up 2.7% this week. Lets look at the good news first -- an Ifo survey showed German carmakers became more optimistic about their prospects for production and exports in May. Goldman Sachs lifted its rating on Renault to "buy" after the French group got a 5 billion-euro state-backed loan.
A planned takeover of Spain's Masmovil by private equity firms KKR, Cinven and Providence is going ahead, too; the sides have reportedly signed a clause making it harder for other firms to counterbid.
On the downside, LVMH's $16.2 billion takeover of Tiffany seems to have run into trouble. Insurer AXA cut dividends and Lufthansa posted a first-quarter net loss of 2.1 billion euros. Austrian steelmaker Voestalpine reported a net loss for the business year ending March, as demand from the car industry shrank.
In emerging markets, the weaker dollar may boosting stocks and currencies, but PMIs paint a depressing picture. Indian services, for instance, enduring a devastating contraction in May. No wonder the World Bank has warned of "lasting scars" on developing markets. (Editing by Larry King)