European stocks extend gains, dollar weakens

LONDON: European stock markets rose Tuesday, extending the previous session's gains after a record-lead from Wall Street tech stocks but confidence was kept in check by ongoing China-US tensions and lack of movement on a new US stimulus, analyst said.

Technology firms continued to lead a rally in New York overnight, sending the Nasdaq to yet another all-time high, while the S&P 500 closed just short of a record finish as frustrated investors wait for Democrats and Republicans to hammer out a much-needed virus financial support package.

Asia's main stock indices steadied Tuesday, while the dollar slid versus its main rivals and oil prices dipped.

"The dollar continues to fall with investors expecting the Fed to maintain its expansionary monetary policy for a long time owing to concerns the persistence of COVID-19 will weigh on economic recovery," noted Fawad Razaqzada, market analyst with ThinkMarkets.

"The greenback is also suppressed because of the lack of haven demand for the reserve currency, with investors evidently favouring foreign currencies, gold and bitcoin," he added.

The American stimulus stand-off is one of a number of issues nagging markets, with China-US tensions continuing to sour and coronavirus fallout in full view.

UK retailer Marks and Spencer on Tuesday announced 7,000 job cuts. In the US, Walmart reported surging e-commerce sales.

Trade, stimulus tensions

Washington-Beijing unrest meanwhile took a new twist, with the US expanding sanctions on Chinese telecoms giant Huawei to further limit its access to computer chips and other US-made products.

While there are concerns raised tensions between the US and China could affect the superpowers' recently signed trade pact, such fears have been played down by both sides.

"For the moment, the fact the trade deal remains in place, and will do while the two sides choose not to hold their six-month review that was to have taken place last weekend, is seen as overriding the building evidence of a technology cold war now under way," said National Australia Bank's Ray Attrill.

Analysts said there was not too much concern on markets about possible tax hikes if Joe Biden beats President Donald Trump in the race for the White House.

The Democratic Convention kicked off Monday and "the theme should be that Biden will be good for the economy," said Edward Moya at OANDA.

"Wall Street seems convinced that Biden's tax policy will not kill the stock market... a Biden presidency could offer greater certainty and stability for the economy," Moya added.