German Survey Fuels Indices Optimism

German Survey Fuels Indices Optimism

May 25, 2020

Stock markets rose higher on Monday after a survey showed German business morale rebounded in May, boosting optimism around economic re-openings. 

Lockdown measures introduced in mid-March have put the global economy on track for a recession this year. Only unprecedented stimulus by global central banks held up world markets in recent weeks.

With nervous investors wary of adding to their equity holdings over concerns on what a post-lockdown world would look like, Germany’s Ifo institute survey for May gave some relief. 

Its business climate index rose to 79.5 from a downwardly revised 74.2 in April, higher than a Reuters poll had forecast, and fuelling optimism about the outlook of Europe’s biggest economy after a drop in the first quarter. 

The bullishness in the stock markets contrasted with caution in currency markets, where the dollar ended a rare weekly loss to rise to a one-week high against its rivals. The dollar, which tends to behave like a safe-haven asset during market turmoil and political uncertainty, gained after China’s move to impose a new security law on Hong Kong heightened concerns about the stability of the city and global trade prospects.

Investors were rattled on Friday when Beijing announced details of the security legislation, which critics see as a turning point for the territory.



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