U.S. markets and stock exchange traded funds surged Monday, following the optimism over China’s markets and data that showed unexpected growth in the U.S. services sector last month.
On Monday, the Invesco QQQ Trust (NASDAQ: QQQ) was up 2.2%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) gained 1.4% and SPDR S&P 500 ETF (NYSEArca: SPY) rose 1.4%.
Leading the charge in global markets on Monday, Chinese stocks surged, with the Shanghai Composite Index hitting its highest level since early 2018, on ample liquidity, cheap funding and expectations of a quicker recovery in business activity than other major countries that are still dealing with the aftermath of the coronavirus outbreak, Reuters reports.
The gains were also fueled by growing optimism that the U.S. will be able to avoid another widespread lockdown on businesses, even as new coronavirus cases pop up in some states.
“Very few people think that there will be as draconian lockdowns again,” James Athey, a senior investment manager at Aberdeen Standard Investments, told the Wall Street Journal, adding that investors are watching for updates on a vaccine and treatment developments.
Additionally, the ISM’s non-manufacturing activity index increased to 57.1 in June, or almost back to pre-pandemic levels.
“Investors are more focused on what the other side of this pandemic looks like, as opposed to the short-term risks of shutdowns,” Matt Lindholm, managing director – investment strategies at CAZ Investments, told Reuters.
The markets largely shrugged off concerns of rising Covid-19 cases as several states reported a record increase in new infections over the Independence Day weekend, with Florida surpassing the highest daily tally reported by any European country during the height of the outbreak.
“July is going to be critical in making sure the virus can be contained and in a way that the economic recovery can continue and if Democrats or Republicans get together to continue to supply a type of fiscal stimulus that can continue to support the economy,” Keith Buchanan, senior portfolio manager at GLOBALT Investments, told Reuters.
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