Spain and Italy data continues to bolster confidence
|Equities are still racing higher, as the news from key countries like Spain and Italy remains positive.
Stocks continue to rally as investors look for the positives in the current global outlook. Spain and Italy, the two key metrics for markets to gauge the effectiveness of the western world’s response, are continuing to see improvement, while in the US New York’s position has stabilised, even if it has not begun to improve. This upbeat mood continues to support risk assets in general, and not just stocks, although it is the surge in equities markets, breaking out above recent highs, that is the real indication of a more ebullient mood. Being forward looking, stock markets can now look forward towards a potentially brighter future, even if the economic data remains poor, and with US equities in particular still attractively-priced relative to the start of the year, the rally may have further to go.
The big gainers in London this morning are still those that have suffered some of the most substantial drops, such as Cineworld and Carnival. Actual good news is still thin on the ground, but brave investors are moving back into these names on the assumption that they actually survive the crisis, rather than go under entirely. Those assumptions are heavily dependent on the UK (and others) recovery path, but at least a way out of the crisis is now conceivable.
Ahead of the open, we expect the Dow to start at 23,244, up 565 points from Monday’s close.
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