Global stocks close to three month high

World stocks held their ground near three-month highs as the euro hit its highest level since March 10, thanks to Europe’s stimulus boost, fuelling hopes for a global rebound.

Investors are pricing in an economic recovery despite data showing the severe damage wrought by coronavirus lockdowns. Later in the day, U.S. nonfarm payrolls figures are expected to show further deterioration in the country’s jobs market.

Led by a jump in banks, insurers, vehicle manufacturers and travel, the pan-European STOXX 600 jumped 1.3%, still enjoying a boost from the European Central Bank’s pledge to supply extra cash to its Pandemic emergency purchase programme. The STOXX 600 is about 15% below all-time highs but has recovered more than 37% from March lows.

MSCI’s broadest index of AsiaPacific shares outside of Japan rose 0.7%, reversing early losses to stay near a 12-week top. The index is up about 7.4% this week, on track for its best weekly showing since December 2011. With investors tentatively in risk-on mode, emerging market stocks were up 0.6% on the day and on course for their best week since December 2011.

World equity markets were thrashed in March when they hit “bear territory” on fears the COVID-19 driven lockdowns would push the global economy into a long and deep recession. Market sentiment has since been bolstered by central bank stimulus.

Investor attention is now focused on Friday’s U.S. employment report, which is expected to show nonfarm payrolls fell in May by 8 million jobs after a record 20.54 million plunge in April. The U.S. unemployment rate is forecast to rocket to 19.8%, a post-World War Two record, from 14.7% in April.

Spot gold was down 0.2% at $1,708.07 per ounce, set for a third consecutive weekly decline as economic recovery hopes fuelled demand for riskier assets.