Optimism returns after superb PMIs

Stocks were soaring on Tuesday and EU indices were 2% higher, while the US benchmarks traded 1% stronger ahead of the US opening bell. 

Euro zone PMIs recovered to 47.5 from May’s 31.9 and April’s record low of 13.6. Meanwhile, the German services PMI rose to 45.8 from 32.6 previously and the manufacturing sector improved from 36.6 to 44.6. 

Moreover, French PMIs jumped above 50.0 in June, which signals that both sectors are returning to a economic expansion. The Brittish PMIs also improved markedly and investors are now waiting if the same improvement will happen in the US. The numbers for the United States will be released later in the day. 

It seems that investors are ignoring raising COVID-19 cases in the US as hopes for stimulus and positive economic growth data outweighed the negative sentiment from the virus. 

In FX, the greenback reversed earlier gains and it fell against most of its Group-of-10 peers, as haven demand waned after President Trump said the phase one trade deal with China remained “fully intact.” Risk currencies recovered after earlier being sold aggressively after Navarro was reported as saying that the U.S. trade deal with China is “over.”

Oil was having a great day as the WTI benchmark jumped above the 200-day moving average and was trading comfortably above it and also above the psychological level of 40 USD.