Read for 4 minutes (Reuters) – NEW YORK (Reuters) – Even as U.S. stocks linger around record highs, concerns about the spread of the Delta coronavirus type are surfacing in various areas of the global financial markets. During the coronavirus outbreak in New York City, New York, United States, on March 13, 2020, a guy walks down Wall Street wearing a protective mask. REUTERS/FILES/Lucas Jackson According to Helix, a California-based genomics business, the Delta variant is currently found in over 90 nations and has become the most common variant among new COVID-19 cases in the United States. However, it’s difficult to say how much the additional burden will wreak havoc on the global growth resurgence that has been propelling risk assets higher in recent months. Concerns about the Delta version may be pushing the needle in the following assets. GRAPHIC: Stocks in the travel and leisure industry in the United States dip STOCKS FOR TRAVEL AND PLEASURE According to a Reuters study, Southwest Airlines, American Airlines, Delta, and Carnival Corp were among the 25 worst-performing equities in the last month. In June, the Dow Jones U.S. Travel & Leisure Index declined 3.35 percent, while the S&P 500 Index rose 2.2 percent. Oil prices, which had been battered in the aftermath of the outbreak, climbed around 10% in June. Worries about the Delta variety are dragging on the currencies of countries where it is rapidly spreading, including the Australian dollar and the British pound. The changes aided the dollar’s advance, which was prompted by the Federal Reserve’s hawkish tilt and saw the greenback gain 2.7 percent against a basket of rivals in June. “I believe the risks of the Delta variation were most apparent early on in the British pound,” said John Doyle, vice president of dealing and trading at Tempus Inc., an FX payments provider. “Right now, I believe it’s most visible in Oceanic currencies, which are often linked to Asian risk sentiment.” GRAPHIC: Gains are being pared down. TREASURIESIN recent weeks, some investors have flocked into Treasuries, encouraged by views that U.S. GDP is nearing a nadir and that the Federal Reserve will be less tolerant of growing consumer prices. Fresh uncertainty regarding Covid-19, according to some investors, may be hastening the increase in yields on US government bonds, which are among the world’s most popular safe investments. In a note published on Wednesday, Arnim Holzer, a strategist with EAB Investment Group, said, “The risk that gradual lockdowns could recur has recently been a factor” in Treasury positioning. “With U.S. Treasury and dollar gains, multi-asset and safety seeking appears to be gaining a little traction,” Holzer added. GRAPHIC: The value-growth gap is closing. VALUE VS. GROWTH Value stocks, which trade at low multiples to book value and are more susceptible to economic cycles, soared earlier this year on prospects of an economic comeback, but have since plummeted. Meanwhile, shares of growth companies such as Amazon.com, Netflix, Zoom Video Communications, and ETSY Inc have surged, as have shares of stay-at-home bets like Amazon.com, Netflix, and Zoom Video Communications. Marko Kolanovic of JP Morgan believes the change is similar to one that occurred in February, when investors were defensive due to concerns about the Alpha variant, only to sell bonds and reinvest in value stocks once the threat had passed. “As investors examine the so-called Delta version, we expect this to happen again,” Kolanovic added. Saqib Iqbal Ahmed contributed reporting, while Ira Iosebashvili and Stephen Coates edited the piece./n
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