LONDON: Global stocks extended a rally Tuesday, though investors continued to weigh whether the recent rally may be excessive given still-poor economic conditions. Treasuries rose with the yen, reported Bloomberg.
S&P 500 futures fluctuated and European counterparts rose. Earlier, the US benchmark closed at a 15-week high, bringing its rally from the March low to almost 45%. Australian shares jumped after a holiday, while stocks in Hong Kong pushed higher. Japanese stocks came off lows with their Korean counterparts, with traders monitoring news that North Korea will shut contact with the South. The dollar headed for a ninth day of losses, the longest slide in more than a decade, while oil edged up.
Global equities have climbed back to their levels in February, when the coronavirus began spreading rapidly outside of China. But worries remain that economic growth may struggle to keep pace — the World Bank warned the global economy will contract the most since World War II this year.
“There are a lot of unknowns that we are dealing with despite the fact that normalizations of economic activities are still on track; there are still a lot of unknown factors that we have to factor in,” Frank Tsui, a senior fund manager at Value Partners, said on Bloomberg TV.
On the policy front, the Federal Reserve expanded its Main Street Lending Program, allowing more companies to participate and lessening the burden on banks that create the loans. The move came ahead of the Fed’s policy meeting Wednesday.
To Citigroup Inc. strategists including Tobias Levkovich, positioning in U.S. equities may now be overly extended. For his part, Stan Druckenmiller — who last month warned about owning stocks — said on Monday that he now believes he was “far too cautious” during the current market rally.
