| Want the lowdown on what's moving European markets in your inbox every morning? Sign up here. Good morning. Investors are questioning how much higher European stocks can rise, Beijing is struggling to control a new outbreak of coronavirus infections and geopolitical risks are simmering. Here's what's moving markets. Upside Questioned It was a mixed trading session in Asia after Europe's Stoxx 600 had its best day for about a month on Tuesday due to stimulus prospects. Central banks may well have put a floor under Europe's equities, but after the rally from March lows, 78% of investors surveyed by Bank of America Corp believe the stock market is overvalued, the largest number since 1998. Strategists on average expect the Euro Stoxx 50 Index, which tracks the biggest blue chips, to end 2020 down 4.5% from Tuesday's close, meaning the highs might already be behind us. Beijing Infections Rise Beijing ordered all schools to close as it struggles to halt a new coronavirus outbreak which has already spread to neighboring provinces. The city reported 31 new coronavirus cases Wednesday, taking the total number of infections to 137. Meanwhile, New Zealand called in the military to enforce border controls after two women who arrived from the U.K. were allowed to leave quarantine early and later tested positive for coronavirus. Elsewhere, there's a new analysis showing how the speed of lockdown implementation can be crucial, and on Covid-19 treatments, low-cost anti-inflammatory drug dexamethasone was shown to improve survival. Geopolitics Risks Geopolitics have stormed back onto our radar. North Korea said it would deploy troops into areas on its side of the border where it had joint projects with South Korea, following news yesterday that it blew up an inter-Korean liaison office in an explosive rebuke to Seoul. Elsewhere, German officials were lining up to condemn Donald Trump's latest verbal attack on the nation after the U.S. leader confirmed his plan to withdraw troops from the European country unless it boosts defense spending. "Germany's delinquent. They've been delinquent for years," Trump said this week. Johnson's Aid Move Boris Johnson faced criticism -- including from another former Conservative prime minister, David Cameron -- for announcing the department for U.K. overseas aid will be folded into the Foreign Office as part of his post-Brexit plans. Aid will be linked more explicitly to Britain's political goals, Johnson said as he defended the move, saying Britain has been seen as a "giant cashpoint in the sky," for too long. The news came the same day the British leader bowed to pressure to provide free meals for the poorest children over the summer after a campaign led by soccer's Marcus Rashford. Meanwhile, data Tuesday showed U.K. jobless claims more than doubled to almost 3 million during the virus lockdown. Coming Up… Statistics are expected to show U.K. inflation slipped in May, and U.S. Federal Reserve Chairman Jerome Powell takes his testimony to congress into its second day this afternoon having stuck to his message of economic uncertainty on Tuesday. Commodity markets, meanwhile, will watch for the Organization of the Petroleum Exporting Countries' monthly market report as crude futures snap a two-day gain. Online clothing retailer Boohoo Group Plc and DIY store chain-owner Kingfisher Plc provide earnings reports. U.S. tech firm Oracle Corp. projected stagnant revenue in the current quarter last night. What We've Been Reading This is what's caught our eye over the past 24 hours. And finally, here's what Cormac Mullen is interested in this morning Global stocks are acting a bit like the proverbial dog that caught the car, having rallied on anticipation of better-than-expected economic news, they don't know what to do now that they've got it. A lot of hope is priced into stocks, but there is still some caution if you know where to look for it. Taking global retail stocks as a proxy for optimism -- given consumer spending is a good gauge as any for a return-to-normal behavior -- Bloomberg's World Retail Index is about 3% away from turning positive for the year. Meanwhile, Bloomberg's World Airline Index makes a good gauge for pessimism, as a full reopening of international travel will probably be the last bit of normality to actually return. That's still almost 40% below where it started the year. The broader market -- in this case the Bloomberg World Index -- is clearly siding with the optimists, just 5% off breaking even for the year. There is no rule that says where stocks "should be" but one could argue the reality of the situation dictates most likely somewhere in between, especially given fresh outbreaks of the coronavirus in areas where it had been under control, and the ongoing growth of the first wave of the pandemic. That suggests the optimists -- and the broader stock market -- may have to dial back a little on their positivity.  Cormac Mullen is a Cross-Asset reporter and editor for Bloomberg News in Tokyo. Like Bloomberg's Five Things? Subscribe for unlimited access to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. | 
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