Markets

European stocks open higher as gold rally cools

Energy and construction shares led the advance in the Stoxx Europe 600 Index

Photograph: iStock

Tue Jul 28 2020 - 09:50

European stocks opened higher alongside US equity futures as the gold rally cooled.

Gains in energy and construction shares led the advance in the Stoxx Europe 600 Index. Contracts on the S&P 500 and Nasdaq 100 indexes fell from their session highs but stayed in the green. LVMH dropped after the French luxury conglomerate reported earnings that missed analyst expectations. Gold futures briefly jumped to $2,000 an ounce and the dollar traded near a 22-month low.

Investors are betting setbacks in the fight against the coronavirus will lead Federal Reserve chairman Jerome Powell to signal Wednesday that rates will stay near zero for longer. Health officials are tackling rising cases in countries ranging from Japan and China to Germany, underscoring the difficulty of curbing the pandemic.

"The reality is that the Fed has proclaimed that they are going to keep the printing presses rolling, they will print money and it has created this all-you-can eat buffet," said Terri Spath, Sierra Investment Management's chief investment officer. "The bottom may be in for the year, but we do expect volatility in the future."

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Meanwhile, US lawmakers are continuing efforts toward the country's next fiscal stimulus. Senate Republicans presented a $1 trillion proposal as a first step toward negotiating a compromise with Democrats, who've offered their own $3.5 trillion plan.– Bloomberg

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