* Equities rally as stimulus soothes second wave worries
* U.S. retail sales see record rebound
* Fed announces start of corporate bond buying programme
* Bank of Japan increases support for cash-strapped firms
* Treasury and Bund yields edge higher
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Marc Jones
LONDON, June 16 (Reuters) - Global stocks were back firing
on all cylinders on Tuesday as a record rebound in U.S. retail
sales and fresh support from the Federal Reserve and Bank of
Japan reignited risk appetite after a bumpy few days.
A near 5% jump by Japan's Nikkei .N225 gave Asia
.MIAP00000PUS its best day since late March, Europe made 3.5%
gains .FTSE .FCHI .GDAXI and a near 3% leap for Wall
Street futures had U.S. bulls back up and running. .N .EU
0#.INDEXE
It wasn't just a stimulus sugar rush. The U.S. Commerce
Department said overall retail receipts rose 17.7% last month
after falling by a record 14.7% in April. The gain was more than
double the previous record of 6.7% in October 2001, when
Americans were resuming spending in the aftermath of the 9/11
attacks. Germany's monthly ZEW investor sentiment survey showed that
investors are confident that Europe's largest economy will be
over the worst of the coronavirus impact by the end of the
European summer. "Retail sales in the U.S. came roaring back in May by much
more than expected," said Neil Birrell, Chief Investment Officer
at Premier Miton. "A combination of improving data and Fed
policy will keep investors happy"
Those retail figures also helped the dollar =USD firm to
96.65, having dropped almost 1% from Monday's high of 97.396
overnight as risk-sensitive emerging market currencies such as
Mexico's peso and South Africa's rand saw big 1-1.5% bounces
too. /FRX EMRG/FRX
Britain's pound GBP/ rose on a mix of better-than-feared
unemployment numbers and friendlier Brexit talks, while the euro
and yen were shunted down to $1.1295 EUR= and 107.43 JPY=D3
by the U.S. data, having barely moved for most of the European
session. /FRX
The Bank of Japan on Tuesday increased its lending packages
for cash-strapped firms to $1 trillion from about $700 billion,
but also kept rates steady, sticking to its view that the
Japanese economy will gradually recover from the impact of the
coronavirus pandemic.
The Fed also announced on Monday eagerly-awaited details of
its programme to lend funds directly to companies.
The facility, which began purchasing shares of
exchange-traded funds in mid-May, is one of the Fed's recently
created tools meant to improve market functioning after the
coronavirus.
POWELL PATTER
In the bond markets, benchmark 10-year Treasury yields
US10YT=RR rose from 0.74% to 0.77, and the spread between
two-year and 10-year yields US2US10=TWEB widened to 57 basis
points in another sign of improving risk appetite.
Federal Reserve Chair Jerome Powell begins the first of two
days of testimony before U.S. lawmakers later and is expected to
flag an uncertain and uneven economic recovery that will likely
require continued monetary and fiscal support.
German, French, Dutch and other core yields rose in Europe
too. Riskier Italian yields fell to their lowest since the end
of March and the iTraxx European crossover index, which reflects
the cost of insuring against junk-rated corporate bond defaults,
fell to its lowest in six days ITEX05Y=MG . GVD/EUR
"In the absence of a further surge in new (coronavirus)
infections in China or the U.S., the market hopes about monetary
and fiscal tailwinds alongside improving sentiment indicators
should prevail," Commerzbank strategists wrote.
Oil prices also steadied as lingering concerns that fuel
demand will be eroded by new coronavirus infections were offset
by expectations of further cuts in crude supplies. O/R
U.S. crude CLc1 was trading up 1.5% at $38.58 a barrel,
after falling 1.2%, and Brent crude LCOc1 also rose 1.4% to
just above $41 per barrel.
The retail sales data pushed Wall Street futures up over 3%
ESc1 after the U.S. markets had made a late dash to finish
higher on Monday.
A whopping 98% of investors surveyed by BOFA believe markets
are "overvalued" after world stocks roared back from March lows.
But those fears haven't stopped many from joining the rally.
The survey showed hedge fund net equity exposure jumping to
52% from 34%, the highest since September 2018. U.S. tech and
growth stocks remained the "most crowded trade" for a second
straight month. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Global assets http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
S&P 500 market cap, daily moves https://tmsnrt.rs/2YCDodm
Asset performance vs outbreak https://tmsnrt.rs/2YF3T1T
Stocks and oil versus COVID-19 cases https://tmsnrt.rs/3cXWNdO
Asia stock markets https://tmsnrt.rs/2zpUAr4
Global markets on the recovery run https://tmsnrt.rs/2UNKMS4
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