The stimulus measures proposed in Europe and Japan also help. The European Commission has proposed a € 750 billion recovery fund. While Japan has approved a new maxi aid plan worth over $ 1.1 trillion in support of the recovery. And in the meantime, the chances of a new US intervention are increasing.
For the time being, investors have relegated tensions between the United States and China to the background. Although Secretary of State Mike Pompeo has informed Congress that Hong Kong should no longer be considered independent of China. The DJ added 553.16 points, 2.21%, to 25,548.27. The S&P 500 rose 44.36 points, 1.48%, to 3,036.13. While the Nasdaq increased by 72.14 points, 0.77%, to 9,412.36.
The reasons for the optimism of the stock exchanges
The reasons for this lively trend of the stock exchanges in the last few days is partly linked to the confidence on the end of the lockdowns. A study by Goldman Sachs a few days ago testifies that in all the countries that first ended the lockdown the virus showed no signs of recovery: this bodes well, although the time frame is still too short to sing victory. The markets, however, already assume that the reopening of activities will lead to an economic recovery. This is demonstrated by the fact that, in the last few days, the sectors penalized by the coronavirus have been the most bought on the stock exchange: cars and travel. A sign that the market is really starting to position itself on the recovery. Also raised by the Recovery Fund proposed by the European Commission on Wednesday.
Economists and research institutes remain very cautious in forecasts, indeed they are still updating them downwards. Two days ago it was Fitch’s turn. To support the share prices is the liquidity on the market and more could come on June 4, when the ECB is expected to expand its pandemic securities purchase plan (PEPP) currently from 750 billion. On June 10, there will be new decisions by the Fed.