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04.06.2020 05:52 PM
Rally in the stock markets of Europe and America continues

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The stock markets of the United States of America continue to rise steadily. Yesterday's trading closed in a positive zone in almost all directions. The reason for this was the next batch of statistics, which demonstrated that the damage from the global COVID-19 pandemic would be slightly less than previously thought. Moreover, the Dow Jones Industrial and S&P 500 indices showed a very outstanding result and were able to reach the highest level in the last three months.

The Dow Jones Industrial Average index was higher by 527.24 points at the end of the trading session, indicating a growth of more than 2% (plus 2.05%). This allowed it to be at around 26,269.89 points.

The Standard & Poor's 500 index increased by 42.05 points, or 1.36%: its result at the close of trading was 3,122.87 points.

The Nasdaq Composite Index also rose 74.54 points (plus 0.78%) and reached 9,682.91 points.

It can be recalled that the stock markets of not only America, but other regions have recently recorded a positive trend. For several trading sessions, they are closing in the positive zone in most areas. Even the protests in the United States, which continue to this day, could not weaken the interest of investors. In addition, market participants almost stopped responding to the conflict between the United States and China, because they realized that the words of the American leader were at odds with the deed. He repeatedly stated about the termination of trade relations between countries, but so far this has not happened, and investors have ceased to take it seriously.

This week, another batch of unemployment statistics was released in the United States of America, which, by the way, turned out to be much better than preliminary forecasts. As it became known, the number of jobs in the country in the private sector in May declined by 2.76 million, which was much lower than analysts' expectations. Most experts argued that the reduction should be no less than 8.66 million. It should be noted that it was at the level of 19.56 million in April. Such rapid positive dynamics in this sector cannot pass by the eyes of investors who respond positively to such news, since they are an indicator of a faster recovery of the economy after the crisis that occurred against the backdrop of the coronavirus pandemic.

Market participants are now waiting for unemployment statistics from the US Department of Labor, which should be released tomorrow.

The growth was also noted by the index of business activity in the service sector of America. Over the past month, it became larger and reached the level of 45.4 points, while it occupied a record low line at 41.8 points in April. Analysts' preliminary forecasts were much more modest: an increase of no more than 44 points was expected. This also cannot but please traders who understand that the economy is gradually returning to its previous mode of operation.

The market is waiting for positivity. Investors hope that the worst is behind us and that only growth will await everyone in the future, and this makes the main indexes grow. Moreover, the confidence of market participants is supported by the resumption of the work of an increasing number of enterprises in the country. At the same time, risky assets are also in demand due to grand stimulus measures from the US Federal Reserve, which is doing everything to help the economy get out of stagnation.

Bank securities rise in value almost everywhere. Shares of Citigroup Inc. rose 4.9%, Wells Fargo & Co. became more valuable by increasing 5.2%, and Bank of America Corp. increased by 4.6%.

The stock price of the largest record company in the world, Warner Music Group Corp., demonstrated incredible growth immediately by 20.5%, which was not expected by even the most experienced investors.

Securities Lyft Inc. rose by 8.7 and Shares of Zoom Video Communications Inc. rose in price by 7.6%. This is one of the few companies that was able to increase revenue by more than 2.7 times t during the stagnation.

Nevertheless, it was not without some negativity: for example, a decline of 6.1% was noted in Campbell Soup Co. securities. And this despite the fact that one of the largest food producers in the United States of America was marked by an increase in net profit for the third financial quarter, which made it possible to make a better forecast for the next financial year.

Stock indices of European countries have also caught a positive wave and are growing amid news about the ongoing opening of world economies.

According to the results of yesterday's trading session, the overall index of enterprises in the Stoxx Europe 600 region grew by 2.54%. Its current level was at around 368.92 points.

The UK FTSE 100 index gained 2.61%, the German DAX index increased 3.88%, the French CAC index supported positive dynamics and rose 3.36%, the Italian FTSE MIB index jumped 3.54%, and the Spanish index IBEX 35 added 2.95% to the previous value.

Yesterday's statistics on unemployment in Europe, which was presented by the Statistical Office of the EU, reflected an increase of 7.3% in 19 countries of the region. It can be recalled that this indicator also increased by 7.1% a month earlier. Most experts claimed that growth would be higher - at least 8.2%. Thus, some improvement in this sector supported the market.

The general index of procurement managers among 19 eurozone countries last month became higher and went to the level of 31.9 points. It can be noted that a catastrophic drop to 13.6 points was recorded in April. The preliminary forecasts of experts also turned out to be more modest: an increase of up to 30.5 points was expected. Thus, the current situation could not but rejoice investors.

The activity indicator in the EU services sector also became larger and reached the level of 30.5 points. And here, preliminary forecasts reflected the smallest possible growth - up to 28.7 points. The minimum value of April was at the level of 12 points.

In the corporate sector, an increase in the value of shares in the following companies can be noted. LVMH increased its value by 2.21%, a positive effect was noted after the acquisition of the American jewelry chain Tiffany & Co, whose value is estimated at $ 16.2 billion.

Securities Renault SA increased by 10.5% after the news of the opening of a credit line in the amount of 5 billion euros, or 5.58 billion dollars in a group of banks with a guarantee from the state.

Deutsche Lufthansa AG shares also increased in value by 7.7%, although the company's net loss for the first quarter was very significant.

The French insurance company AXA SA rose at the same time by 9.4%, despite the decision to pay dividends almost half as much.

The general positivity does not leave the stock markets, which is likely to continue the emerging growth and strengthen the confidence of investors.

Maria Shablon,
Pakar analisis InstaForex
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