European stocks saw a two-week high on Monday due to the ease of COVID-19 restrictions in China.
China went easy on its strict coronavirus protocols, lifting concerns off investors who have been worried about global growth. While stocks across China amassed gains, US-listed Macau casino stocks increased in premarket trading. China travel stocks and index futures also advanced. Additionally, Dutch investment company, Prosus surged as the company revealed its intention to cut its Tencent stake.
Stocks in China Pump as Government Cuts Quarantine Period
Europe’s Stoxx 600 climbed 0.5%, with significant gains in mining and energy shares. Mining stocks pumped 1.8%, while healthcare and industrial stocks were the top contributors to the earnings. However, the index plummeted shortly after. China has been stern with its COVID-19 policies even as many countries have relaxed their regulations and restored normalcy. The nation’s government has reduced the time new arrivals must spend in isolation upon arrival. The quarantine rules isolated the country and impacted its economy. Shanghai further declared victory over the fast-spreading of the unprecedented disease. The latest developments are a huge relief, especially as the country has been wallowing in decline.
A senior analyst at Swissquote Bank, Ipek Ozkardeskaya, commented on how easing the COVID-19 protocols could correct inflation. He added:
“The thing is good news from China is good news for everyone because it could relieve the pressure on supply chains… What we are seeing right now could actually be another dead cat bounce or short-covering as investors are actually preparing for earnings season.”
Generally, stocks have been volatile, swinging back and forth, as investors take time to assess the impact of the interest rate hike. ECB President Christine Lagarde confirmed that the institution was planning to add a quarter-point to interest rates in July. She said lawmakers are set to take action against record inflation if necessary. Lorraine Tan, Morningstar director of equity research, said China coming out of its lockdowns is a sign of hope for the global markets.
US Stocks Record Biggest Single Day Losses
Top US stocks recorded considerable losses in over a week on Monday. As the Dow Jones Industrial Average (DIJA) plunged 0/20%, the S&P 500 lost 0.30% to close lower by 11.63 points at 3,900.11. Furthermore, the Nasdaq Composite also shed 0.72%, finishing by 83.07 points at 11,524.55. According to Dow Jones Market Data, the losses were the most significant single-day point and percentage declines for the three indexes.