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Stimulus effects: Equities are reaching for records with a strong start into the second half of the year

Europe’s financial markets got off to a solid start into the second half of the year on Thursday, with stocks fending off a rapid re-acceleration in coronavirus cases in the region and Both the dollar and oil extend their strong rallies in the first half of the yearreports Reuters.

Early 1% gains in London, Frankfurt, Paris and Milan meant the pan-European STOXX 600 was on the verge of rejoining Wall Street at record highs. In an Asia session thinned by a Hong Kong holiday, the Japanese Nikkei fell 0.3% and the yen hit a 15-month low at 111.18 per dollar as the US currency continued its steady rise.

There was also little evidence of an easing in oil prices. Brent climbed nearly 1% to just over $ 75 a barrel after a whirlwind 45% hike in the first half made one of its best starts in a year on record. Eurozone government bond yields also rose slightly as recent economic data showed that the 19-country bloc manufacturing sector expanded at a record pace over the past month as companies saw the sharpest rise in commodity costs in more than two decades.

“Manufacturing in the Eurozone has grown unmatched for almost 24 years” survey history in June, when demand increased with the further easing of Covid-19 containment measures, “said Chris Williamson, chief economist at IHS Markit.

“However, the sheer speed of the recent surge in demand has created a sellers’ market as capacity and transportation constraints limit the availability of raw materials to factories, which in turn has driven industrial prices up at a rate not previously seen in the survey. ‘

Germany’s benchmark yield on 10-year Bunds rose by one basis point to -0.19% over the course of the day. French, Spanish, and Italian 10-year yields rose by a similar amount. Most of the major economies have seen their government bond yields drive up the cost of borrowing in their economies, up sharply this year as bets are made that central banks will slow incentives as a global recovery drives inflation higher. Due to a shortage of shipping containers and supply chains, which are badly affected by the pandemic, the input price index for the euro zone rose from 87.1 to 88.5 – by far the highest in the history of the survey. The bloc’s inflation fell to 1.9% last month, official data on Wednesday showed.

“The virus still plays a role … although it is difficult to see a big direction at the moment,” ING economist Rob Carnell said on the phone from Singapore.

“There is a broad feeling that the dollar is not such a bad unit to hold,” He said as traders were also waiting for U.S. job data due Friday for guidance on the Federal Reserve’s next move.

‘Everyone is a little nervous.’