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Stock markets climb as data spark bargain-hunting

Stock markets rose on both sides of the Atlantic Monday as hopeful economic data prompted bargain hunting, with some of Asia's equities markets also making solid gains.

Analysts did not seem entirely confident about the reasons for the rebound as investors appeared to shrug off a wide gap between the White House and Democrats about the next round of relief spending, worsening coronavirus numbers in many parts of the world and festering US-China tension.

Michael Hewson at CMC suggested that "US markets appear to be being propped up by a cohort of the large tech stocks, as well as a resilient pharmaceutical sector, on optimism about a possible vaccine, or vaccines".

Ipek Ozkardeskaya, at Swissquote, credited better-than-expected Japanese GDP data for the good mood on trading floors, as well as forecast-beating Chinese manufacturing numbers.

But volumes were light thanks to the summer holiday season, which possibly explained part of the strong market moves.

'Traders at the beach'

"I suspect a lot of traders are at the beach," said Stephen Innes at Axicorp, which he said was "the primary reason why its unwise to craft a narrative to rationalise August's market behaviour".

On Wall Street, the Dow extended opening gains to trade about 250 points higher in the late New York morning as big tech posted gains, with both Microsoft and Apple stock more than three percent up.

Key European indices were up by around two percent or more at the close after manufacturing sector surveys in the region pointed to a return to growth.

Earlier, Japan's Nikkei 225 had received a boost from data showing the economy contracted less than first thought in January-March.

Shanghai also surged following a forecast-beating reading on factory activity from Caixin, days after an official report pointed to a much improved manufacturing sector.

'Remains rampant'

Meanwhile, a spike in coronavirus infections has forced fresh lockdowns and sparked worries about the impact on the world economy.

"COVID-19 either remains rampant or is making worrying localised comebacks across the world," said Jeffrey Halley at OANDA.

"Although not priced into financial markets yet, it remains the critical risk factor to global recovery."

A lack of substantial progress by US lawmakers on a new stimulus package has also frustrated traders, while China-US tensions continued as the White House considers measures against Chinese tech firms, citing national security.

Key figures around 1540 GMT

London - FTSE 100: UP 2.3 percent at 6,032.85 points (close)

Frankfurt - DAX 30: UP 2.7 percent at 12,646.98 (close) 

Paris - CAC 40: UP 1.9 percent at 4,875.93 (close)

EURO STOXX 50: UP 2.3 percent at 3,248.39

New York - Dow: UP 0.9 percent at 26,667.21 

Tokyo - Nikkei 225: UP 2.2 percent at 22,195.38 (close)

Hong Kong - Hang Seng: DOWN 0.6 percent at 24,458.13 (close)

Shanghai - Composite: UP 1.8 percent at 3,367.97 (close)

Euro/dollar: DOWN at $1.1736 from $1.1775 at 2100 GMT 

Dollar/yen: UP at 106.18 yen from 105.88 yen 

Pound/dollar: DOWN at $1.3041 from $1.3072 

Euro/pound: DOWN at 89.99 pence from 90.07 

West Texas Intermediate: UP 2.2 percent at $41.16 per barrel 

Brent North Sea crude: UP 1.7 percent at $44.25

Topics: stock markets , bargain hunting , Michael Hewson , US-China tension
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