Stock markets leapt forward at the opening on Monday, riding the momentum seen last week when the main benchmarks already racked up solid gains. Asian indices were up sharply, with Japan’s large exporters led by the auto and technology sectors, in particular, benefiting from the yen’s slight depreciation against the dollar.

On balance, however, data concerning the spread of Covid-19 seem alarming, with many countries experiencing high numbers of new infections, especially the US but also India and Brazil. New restrictive measures have been introduced in several regions, although widespread business shutdowns like those in March and April are quite unlikely. As a consequence, it looks as though consumer spending will not be affected much. Investors are focusing more on other factors. In particular, hopes of a quick economic recovery are gaining ground again in view of recent macro data. The development of vaccines is moreover progressing rapidly, fuelling optimism and whetting appetites for risk assets.

In bond markets, spreads continue to narrow. The yield on Italian 10-year government issues fell to 1.22%. Debt markets have been bolstered greatly by the flood of liquidity that the main central banks have injected into the financial system to avert a panic.

The minutes of the Fed’s June meeting show that the US central bank’s governors discussed the next steps to be taken, indicating that they are not ready to end their supportive measures.

In economic news, America’s employment figures were much better than expected, with a jump of 4.8 million new jobs created in June despite the spread of Covid-19 infections. The national jobless rate eased to 11%. In Europe the downturn in service industries abated. Factory orders in Germany rose 10% month on month in May. This is encouraging, even though the total is still down nearly 30% year on year. China’s services PMI stood at 58.4 at end-June, a historic high.
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