GLOBAL MARKETS-Stocks and oil gain despite surging coronavirus cases

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By Elizabeth Howcroft
LONDON, June 26 (Reuters) - Markets showed signs of optimism
on Friday, with European shares opening higher and oil prices
rising despite a record number of new COVID-19 infections in the
United States.
They rose across the U.S. by at least 39,818 on Thursday,
the largest one-day increase of the pandemic. The governor of
Texas temporarily stopped the state's reopening on Thursday as
infections and hospitalisations surged.
But European shares opened higher, with the Stoxx 600 up
0.8% .STOXX and London's FTSE 100 up 1% at 0736 GMT .FTSE .
The MSCI world equity index .MIWD00000PUS , which tracks
shares in 49 countries, was up 0.3%, extending gains from late
on Thursday.
"Even though we continue to see some pretty scary virus
numbers coming out of the U.S., it's not really dented sentiment
– not to any sustained degree at least," said Timothy Graf, head
of EMEA macro strategy at State Street Global Advisors.
Graf said that recent temporary downward corrections of
market optimism have had very little follow-through.
The possibility of a second coronavirus wave and renewed
lockdowns has limited market impact because if lockdown measures
resume then markets expect this to raise the likelihood of more
fiscal support for economies.
"There is a disconnect between what you feel should be the
case looking at virus numbers and equities and riskier
currencies holding up relatively well and volatility receding,
but at the same time we've never seen a policy response like
this, not in the last 80 years at least," Graf said.
Having risen between 0500 and 0700 GMT, the dollar fell in
early London trading to 97.317 against a basket of currencies by
0745 GMT =USD .
The riskier New Zealand dollar was up 0.2% NZD=D3 , having
spent most of June at the level it was at before the coronavirus
crisis for markets peaked in March.
Oil prices rose on Friday, extending gains on optimism about
a recovery in fuel demand worldwide, despite signs of a revival
in U.S. crude production. U.S. West Texas Intermediate (WTI) crude CLc1 futures
gained 26 cents, or 0.7%, to $38.98, while Brent crude LCOc1
futures rose 36 cents, or 0.9%, to $41.41.
The U.S. Senate passed legislation that would impose
mandatory sanctions on people or companies that back efforts by
China to restrict Hong Kong's autonomy, in another potential
Sino-U.S. flashpoint. To become law it must also pass the House and be signed by
President Donald Trump. Support for pro-democracy demonstrations
in Hong Kong has slipped, though retains the backing of a slim
majority, a survey conducted for Reuters showed. But demand for safe euro zone government debt was little
changed, with Germany's 10-year Bund yield close to monthly
lows, at -0.479% DE10YT=RR .
The yield on benchmark 10-year Treasuries US10YT=RR was
steady at 0.6725%. Gold XAU= edged up slightly to $1,763.65 an
ounce. US/ GOL/
The pandemic is more likely to leave a legacy of weak or
falling prices for goods and services than to trigger higher
global inflation, according to a majority of over 160 economists
polled by Reuters. The euro zone is "probably past" the worst of the economic
crisis caused by the pandemic, European Central Bank President
Christine Lagarde said on Friday, while urging authorities to
prepare for a possible second wave. "There's still a belief that the unemployment that we see is
temporary, there's still a belief that businesses will be able
to get back to normal, but it's probably right to think that
that's a little too simple,” said State Street's Graf.

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