- Stocks in Europe jumped Tuesday, with the pan-European Stoxx 50 up more than 3%. Futures for the S&P 500 rose 0.5%.
- Analysts say the rise in stocks could be explained by investors choosing to focus on unprecedented aid from central banks and government intervention.
- "Other than insurance and possibly reinsurance, the protests themselves should not directly impact financial markets," said Jeoff Hall, managing economist at Refinitiv.
- Visit Business Insider's homepage for more stories .
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Global stocks jump as analysts say widespread protests in the US will have 'little to no effect' on markets
Global stocks climbed on Tuesday as investors largely ignored mass protests in the US, threats from President Donald Trump to deploy military forces to quash the protests, and a backdrop of escalating US-China tensions.
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Global stocks climbed on Tuesday as investors largely ignored mass protests in the US, threats from President Donald Trump to deploy military forces to quash the protests, and a backdrop of escalating US-China tensions.
Futures for the S&P 500 rose 0.5%, while in Europe stocks rallied sharply, with the pan-European Stoxx 50 jumping more than 3% in morning trade.
At the close in Asia Tuesday, Hong Kong's Hang Seng rose 0.9%, and Japan's benchmark Nikkei rose 1.2%.
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Investor optimism has been fueled by economic reopening and a decline in new coronavirus cases in recent weeks, but some experts fear the protests could lead to a second wave of infections in the US because of the close proximity of protesters.
Protests started last week after the death of George Floyd while in police custody in Minneapolis. Floyd became unresponsive when a police officer knelt on his neck for more than eight minutes last Monday.
The large majority of protests have been peaceful, but many US cities have now seen civil unrest, with the destruction of property, violence, and looting in some places. On Monday night, President Trump threatened to deploy troops on the streets to quash unrest.
While analysts think it odd to see a rise in stocks when the president has threatened to mobilize the military, they say investors are shrugging off widespread unrest and geopolitical risks because of unprecedented ongoing support from central banks.
Zach Abraham, chief investment officer at Bulwark Capital Management, told Markets Insider that the US protests will have "little to no effect" on equities.
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He pointed to US markets being at all-time highs despite mounting economic issues of record unemployment and an ongoing recession.
Moreover, the protests could "possibly be considered bullish as they would only serve to increase federal spending and government intervention," Abraham said.
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Jeoff Hall, managing economist at Refinitiv, said he believes violence, the destruction of property, and the looting of stores, will have an economic impact on the private and public sectors, and specifically on insurance companies, but shouldn't impact markets too much.
"Other than insurance and possibly reinsurance, the protests themselves should not directly impact financial markets," he said.
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"Insurance should cover most if not all property losses, including theft of merchandise and damage to structures," Hall said.
"These would come at a time where state and local balance sheets are already in poor shape due to COVID-19 responses, higher payments to unemployment insurance and lower tax receipts from individuals and corporations."
To provide historical context, previous periods of civil unrest in the US, like the Ferguson protests in 2014 and the LA riots in 1992 barely impacted markets, said Bilal Hafeez, chief executive and editor of financial research firm Macro Hive.
However, he believes the protests will have a significant impact on the US election in November, which itself is likely to move markets.
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Here's the market roundup as of 09.45 a.m. in London (4.45 a.m. ET):
- Asian indexes were up with China's Shanghai Composite up 0.2%, Hong Kong's rose 0.9%, and Japan's rose 1.2%.
- European equities rose, with Germany's up 3.4%, Britain's up 0.8%, and the up 3.2%.
- US stocks are set to open higher. Futures underlying the , the , and the rose 0.5%.
- Oil prices rose, with rose 2.2% at $36.25, and crude rose 2.5% at $39.28.
- The benchmark 10-year Treasury yield fell to 0.04%.
- fell 0.2% to $1,747 per ounce.
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See Also:
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- Famed economist David Rosenberg says investors are falling into a classic market trap that's historically preceded a further meltdown and warns 'there's not going to be much of a recovery'
- 'Embrace the coming crash': A notorious market bear who called the dot-com bust warns big tech stocks are on the verge of succumbing to the economy's downturn
- The European Union's $826 billion stimulus plan to battle the coronavirus is 'too small and too late,' analysts say
SEE ALSO: Police used tear gas to clear protesters from Lafayette park so Trump could take a photo at St. John's Church
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