LONDON – U.S. index futures and European stocks fell on Wednesday, with global shares retreating from recent record highs, as markets remained concerned about the epidemic ahead of the half-year end and critical U.S. jobs data later this week. In reaction to COVID-19, central banks and governments throughout the world have pumped trillions of dollars into asset markets, while vaccination rollouts in recent months have boosted the economy’s outlook.
“The pursuit of yield is a great force. It doesn’t have the story to stop it right now “Nordea Asset Management’s senior macro strategist, Sebastien Galy, stated. However, on the penultimate trading day of the month and half-year, stocks pared some of their gains due to fears over the highly contagious coronavirus Delta strain, which was initially identified in India. “There may be some rebalancing at the end of the month,” said Giuseppe Sersale, fund manager at Anthilia in Milan. “My opinion is that there is concern about the Delta variant’s influence on Europe’s summer season.” Pandemic breakouts are causing tighter restrictions in Indonesia, Malaysia, Thailand, and Australia, and Spain and Portugal have declared limitations for unvaccinated British visitors.
After exuberant overnight U.S. share trading, U.S. S&P futures fell 0.13 percent as consumer confidence in the United States surged to its highest level in almost 1-1/2 years in June.
Concerns about greater prices are being tempered by rising labor market optimism as the economy reopens.
European stocks, on the other hand, fell by 0.89 percent. German markets plummeted by 1.4 percent, while British stocks declined by 0.67 percent. The European benchmark, which set new highs this month, is still on track to have the best first-half percentage increase since 1998.
Inflation in the euro zone dropped in June, as expected, but is expected to rise considerably above the European Central Bank’s target in the autumn due to increasing commodity prices.
The yield on Germany’s 10-year government bond declined 2.2 basis points to -0.194 percent as a result of the data.
MSCI’s global stock index dipped 0.18 percent, but was on track for a sixth consecutive month of gains, a day after hitting an all-time high, and a first-half gain of more than 11 percent.
EYES ON PAYROLLSMarkets are looking forward to the release of US private payrolls data later on Wednesday, ahead of the release of US non-farm payrolls data on Friday, which could impact Federal Reserve policy.
Reuters polled economists, who predicted that private payrolls would increase by 600,000 in June, down from 987,000 a month before.
Economists surveyed by Reuters expected a rise of 690,000 jobs in June, up from 559,000 in May, according to the more detailed labor numbers released on Friday. However, there was a lot of diversity among the 63 estimates, which ranged from 400,000 to more than a million people. The yield on the benchmark 10-year US Treasury note declined by over 2 basis points to 1.4528 percent. The dollar was on track to post its greatest monthly gain since March, owing to a surprisingly hawkish shift in the Federal Reserve’s rate outlook. “Extremely optimistic” Fed Governor Christopher Waller stated on Tuesday that the Fed may need to begin reducing its large asset buying program as early as this year in order to raise interest rates by late 2022. The dollar index increased by 0.06 percent to 92.123, while the yen remained unchanged at 110.49 and the euro fell by 0.1 percent to $1.1882. At US$1.3859, sterling was up 0.17 percent. MSCI’s index of Asian stocks outside of Japan was likely to have a modest monthly loss, but it was still on track to post its fifth consecutive quarterly gain, the longest such stretch since 2006-2007. The index was down 0.05 percent. The price of Chinese blue chips increased by 0.65%. The Nikkei in Japan was down 0.07 percent. After some reports revealed that US crude stockpiles were reducing, oil prices were headed for monthly and quarterly rises. Brent crude gained 0.78 percent to US$75.34 per barrel, while US crude gained 1% to US$73.93 per barrel. Gold futures fell 0.14 percent to $1,759.36 per ounce, leaving it on track for its largest monthly loss since November 2016. (Editing by John Stonestreet, Alex Richardson, and Philippa Fletcher; additional reporting by Danilo Masoni in Milan and Andrew Galbraith in Shanghai.)
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