Stock markets surge on US stimulus hopes

LONDON: Stock markets surged Tuesday on optimism that lawmakers in Washington will hammer out a new stimulus package for the crippled American economy.

European equities got an extra shot in the arm from economic surveys painting a brighter picture than had been feared for the area's recovery prospects.

Confidence among investors in Germany soared to its highest level in almost 17 years in August, according to the ZEW institute's monthly barometer.

Calling the ZEW numbers "very encouraging", analyst Craig Erlam at OANDA said they "suggest the euro area economy is bouncing back quite well following the lockdown".

Global investors, meanwhile, focused "on the prospect of a fiscal stimulus deal from US political leaders... while setting aside concerns about an escalation in US-China trade tensions", said Michael Hewson, chief market analyst at CMC Markets UK.

As the pandemic hustles economies around the world, the US-China stand-off has been a major headache, with the two sides butting heads on several issues that have fanned worries they could renew their damaging trade war.

However, there is some confidence they will stick to their commitments after talks at the weekend to review their January tariffs pact.

"The strong sense is that the Trump administration won't want to jeopardise the deal this side of the election for fear of alienating the important midwest farming constituency," said Ray Attrill at National Australia Bank.

US lawmakers meanwhile remain deadlocked in their pursuit of a new stimulus, though observers say that with an election around the corner, Democrats and Republicans will likely reach a deal.

Trump's executive orders at the weekend deferring payroll taxes, providing $400 in weekly unemployment benefits and making it harder to evict people eased immediate concerns, though markets say a full deal is key.

Shares in Next Digital, the media company owned by Hong Kong tycoon Jimmy Lai who was arrested under a Chinese security law, surged 668 percent at one point thanks to pro-democracy activists buying it.