Global markets beat COVID woes to clock record highs

Despite the surge in Covid-19 cases across the globe and fresh restrictions being imposed in several countries, the global markets are clocking record highs.

The global tally for the coronavirus-borne illness rose above 131.3 million on April 5, according to data from the John Hopkins University. The US continued to lead the world by cases, at 30.7 million.

The US markets however, shrugged off the Covid woes and saw a stellar run as they came back to trade after a three day weekend.  Stocks on the Wall Street climbed to record highs on Monday. Both Dow Jones and S&P 500 saw a record closing with the latter topping the 4000 mark for the very first time.

On Monday, the Dow Jones Industrial Average rose 373 points to 33,527, a record closing high. The S&P 500 gained 1.4% to 4,077, also hitting a new record close. The tech-heavy Nasdaq Composite also climbed 1.7% to 13,705.

So, what are the factors behind the rally despite the grim Covid numbers?

A strong bounce in US job growth, which showed that US hiring jumped in March buoyed sentiments.

Solid data in manufacturing and services sector together raised expectations for a swift economic recovery from the pandemic.

The pace of vaccination also has improved further providing support to the markets. Apart from this, positive comments coming in from US President Joe Biden on him not being worried about the  increase in corporate taxes and their impact on economic growth.

European markets remained closed yesterday on account of Easter Monday but there was a bullish end to the week for the European majors last Thursday. The DAX30 (Germany) and the EuroStoxx600 (Eurozone) rose by 0.66% and by 0.61% respectively, with the CAC40 (France) gaining 0.59%.

Economic data from the Eurozone and the U.S drove the DAX30 to a record high and the EuroStoxx600 to within range of its all-time high.

March Manufacturing PMI for Eurozone came at 62.5 vs 57.9 in February which is likely to push sentiment higher.

The market’s optimistic outlook on the economic recovery seems to be offsetting negative sentiment towards COVID-19 and vaccine shortages across the EU.

This is in spite of the World Health Organization putting the spotlight on the EU and its struggles to bring the pandemic under control.

Overall the markets looking forward and not the current situation and are cheering the macro data which seems to indicate that the economic activity is coming back.