Coronavirus: Factory Growth lifts European Stocks as Gold Hits New High

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uropean stocks rose on Monday, after a survey showed a rebound in manufacturing activity across the continent’s leading economies in July as coronavirus lockdowns eased.

Rising demand saw manufacturing activity expanding in the eurozone last month for the first time since January 2019, according to new purchasing managers’ index (PMI) data on Monday.

The headline figure on IHS Markit’s closely watched PMI survey for eurozone manufacturing rose to 51.8 in July. It follows months of plummeting output as COVID-19 wreaked havoc with both supply and demand, though the decline had levelled off in June with a 47.5 reading. Figures above 50 show most firms surveyed are reporting growth.

The final headline figures for national economies came in at 51 in Germany, 52.4 in France, 53.5 in Spain, 51.9 in Italy, and 53.3 in Britain. A measure specifically measuring output also showed a return to growth in July, hitting 55.3, the highest rate of expansion since April 2018.

European stocks had been mixed at the open, but every leading index was trading flat or higher after the figures were released. The pan-European Stoxx 600 (^STOXX) was up 0.4%, and the Stoxx 50 (^STOXX50E) was up 0.7%.

Germany’s DAX (^GDAXI) rose 1.3%, the CAC 40 (^FCHI) in France rose 0.4%, and Britain’s FTSE 100 (^FTSE) was up 0.1%, paring back losses after opening 0.6% lower.

Asian stocks had been mixed overnight. Stocks in Shanghai (000001.SS) rose 1.8% as a private-sector survey showed Chinese factory activity grew at the fastest pace in almost a decade in July.

Japan’s Nikkei (^N225) gained 2.2%, but the Hang Seng (^HSI) index in Hong Kong shed 0.7%.

But gold prices also hit a new record high in Asia overnight, as fears over the course of the coronavirus and global economic recovery boosted demand for the precious metal.

Spot gold briefly hit a record high of $1,984.66 (£1,519.65) in trading overnight in Asia as investors’ jitters boosted the safe-haven asset, before sliding back to around $1,973.75. US gold futures (GC=F) were up 0.2% to $1,989.50 at around 3.30am eastern time in the US (8.30am in London).

It came after alarm over bleak economic data and rising COVID-19 cases in some countries knocked European stocks hard on Thursday and Friday. The gloomy data saw the pan-European Stoxx 600 (^STOXX) ending July 1.1% lower, marking its first monthly decline since markets plummeted in March.

US stocks looked set for a mixed open. S&P 500 futures (ES=F) were trading flat, Dow Jones futures (YM=F) were down 0.2%, and Nasdaq futures (NQ=F) were up 0.4% at around 4am eastern time after strong earnings from US tech giants last week.