Wall Street rebound leads to jump in global stock markets

World share markets rose on Monday, led by a rebound on Wall Street, even as rising COVID-19 cases threaten to stall the recovery of the world’s largest economy.

Contracts to buy US previously owned homes rose by the highest percentage on record in May. But they remained below their February level and were down compared with May 2019, which also kept alive expectations for even more economic stimulus.

Confirmed COVID-19 cases worldwide rose past 10 million and deaths surpassed 500,000 on Sunday. The relentless spread of the new coronavirus in the United States, Latin America and elsewhere curbed optimism over the global economy and raised worries that some reopening plans will be delayed.

A rally in Boeing shares after US authorities confirmed that 737 MAX certification flights could start Monday gave life to the Dow industrials, while factory- and materials-heavy sectors of the S&P 500 also rose.

The Dow Jones Industrial Average rose 404.28 points, or 1.62%, to 25,419.83, the S&P 500 gained 32.09 points, or 1.07%, to 3,041.14 and the Nasdaq Composite added 88.84 points, or 0.91%, to 9,846.06.

The pan-European STOXX 600 index rose 0.62% and MSCI’s gauge of stocks across the globe gained 0.50%.

Emerging market stocks lost 0.57%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.93% lower, while Japan’s Nikkei lost 2.30%.

It is an important week for US data, with the ISM manufacturing index on Wednesday and monthly payrolls on Thursday, moved up a day due to observance of the Independence Day holiday on Friday. Federal Reserve Chair Jerome Powell is also testifying on Tuesday.

Benchmark 10-year notes last fell 1/32 in price to yield 0.6397%, from 0.638% late on Friday.

The 2-year note last rose 1/32 in price to yield 0.1583%, from 0.168%.

In currency markets, Sterling fell against both the dollar and euro as investors focused on how Britain’s government will pay for its planned infrastructure push, while Brexit-related risks kept pressure on the pound.

Sterling was last trading at $1.2276, down 0.46% on the day.

The dollar index rose 0.058%, with the euro up 0.15% to $1.1234.

The Japanese yen weakened 0.49% versus the greenback at 107.69 per dollar.

US crude recently rose 2% to $39.26 per barrel and Brent was at $41.56, up 1.32% on the day.

Meanwhile, other data on Monday showed an improvement in manufacturing activity in Texas in June after three months of record or near-record declines in output.

The National Association of Realtors said its Pending Home Sales Index, based on contracts signed last month, surged 44.3%, the largest gain since the series started in 2001. Still, contracts remain 10.6% below their level in February before businesses were shuttered in a bid to slow the spread of coronavirus, almost grounding the economy to a halt.

Economists polled by Reuters had forecast pending home contracts, which become sales after a month or two, rebounding 18.9% in May. Pending home sales fell 5.1% from a year ago.

Home resales tumbled to a more than 9-1/2-year low in May. Economists believe the housing market could emerge more quickly from the recession, which started in February, thanks to historic low interest rates.

Applications for home loans are near an 11-year high and building permits rebounded sharply in May as did new home sales. But record unemployment, with 30.6 million collecting unemployment checks in the first week of June, is a challenge.

 In May, pending home contracts soared 43.3% in the populous South. They jumped 56.2% in the West and increased 44.4% in the Northeast. Contracts rose 37.2% in the Midwest.

There were also signs of green shoots in manufacturing. In a separate report on Monday, the Dallas Federal Reserve said its Texas Manufacturing Outlook Survey production index, a key measure of state manufacturing conditions, increased to a reading of 13.6 this month from -28.0 in May.

It said other measures of manufacturing activity also pointed to a rebound in growth this month, with the new orders index racing 34 points to 2.9, its first positive reading in four months. Nearly a third of manufacturers reported an increase in orders. Measures of capacity utilization and shipments also returned to positive territory in June.

But manufacturers’ views of broader business conditions were mixed. The general business activity index surged 43 points but stayed negative at -6.1. The outlook index pulled back into positive territory, rising to a reading of 2.7 from -34.6 in May. About 29% of manufacturers said the outlook had improved, up from 12% last month.

Factory employment measures remained weak. The employment index rose 10 points to a reading of -1.5, with 15% of firms reporting hiring, while 17% said they had laid off workers. The hours worked index rose to -4.3 from -22.8 in May.

Reuters