5 Minutes, by Read more about* European stocks start the day higher* German inflation data is expected* COVID-19 restrictions in Australia and parts of Asia* Oil prices fall for the second day* FX rates around the world are depicted graphically. Reuters/tmsnrt.rs/2RBWI5ELONDON/SYDNEY, June 29 Concerns over new coronavirus outbreaks in Asia undermining an economic rebound pushed global stocks back from record highs on Tuesday, while investors remained nervous about the United States’ retreat from accommodative policies. The pan-European STOXX 600 index was up 0.4 percent, boosted by a surge in industrial, financial, and mining stocks, all of which are expected to profit from improved economic conditions. The European benchmark is on track for its fifth month of increases, thanks to optimism for a sustained rebound. MSCI’s broadest index of Asia-Pacific equities outside Japan, on the other hand, fell 0.5 percent as recent bullish momentum slowed as some governments re-imposed lockdowns to restrict the spread of the Delta strain of the virus. The Nikkei 225 index in Japan lost 0.8 percent, while the ASX/200 index in Australia fell 0.1 percent as rising COVID-19 limits across the country dampened sentiment. The South Korean stock market ended the day with a 0.5 percent loss. After a rise fueled by the country’s rapid recovery from the impact of the COVID-19 outbreak, Chinese stocks fell 0.92 percent as investors booked profits. The S&P 500 e-minis in the United States were flat, while MSCI’s all-country world index, which measures equities in 50 nations, was 0.1 percent down, off record highs hit the day before. Fears of the highly infectious Delta form spreading are dampening sentiment at a time when markets are jittery following the Fed’s surprise hawkish stance earlier this month. Indonesia is dealing with unprecedented levels of cases, while Malaysia is planning to extend its curfew and Thailand has imposed further restrictions. “The most crucial aspect in the market’s mind right now is the prognosis for policy in general and the United States especially, both fiscal and monetary,” said James Athey, investment director at Aberdeen Standard Investments. “That might easily be foolish or complacent.” Investors in Europe were waiting for the release of German consumer pricing data on Tuesday to see what it meant for the central bank’s sustained intervention. According to a Reuters survey, the result for June, which will be released at 1200 GMT, will be 2.3 percent, exceeding the European Central Bank’s aim for the EU. On Friday in the United States, a much watched jobs data for June will be issued. It has the potential to affect the Fed’s policy outlook and push interest rate hike expectations forward. “Inflation is already much higher than the Fed anticipated,” said Ray Attrill, Head of FX Strategy at National Australia Bank in Sydney. “The pace of improvement in the labor market stands head and shoulders above every other indicator in terms of when the Fed will feel comfortable signaling the start of tapering.” On Monday, news of a possible bipartisan infrastructure spending agreement in the United States helped to improve risk appetite. On Wall Street, the Nasdaq and S&P 500 indexes rose 0.98 percent and 0.23 percent, respectively, to new all-time highs on Monday, fueled by tech companies and expectations for a strong earnings season. Yields on benchmark 10-year U.S. Treasuries increased slightly to 1.4951 percent, but remained below recent highs. It had its biggest weekly rise since March last week. The 10-year bond yield in Germany was unchanged at -0.187 percent, close to a one-month high. The dollar soared to three-month highs against major peers in currency markets. The dollar increased 0.14 percent to 92.003 against a basket of its peers. However, many investors remained cautious ahead of Friday’s employment report. Investors will also be watching consumer confidence data from the United States later on Tuesday and the manufacturing index from the Institute for Supply Management on Thursday for hints on where interest rates are headed. Concerns over the spread of the highly contagious Delta strain first found in India have boosted demand for both the dollar and the yen. The euro fell 0.1 percent to $1.1911, creeping closer to the two-and-a-half-month low of $1.8470 set on June 18. The British pound fell 0.2 percent to $1.3861, returning to a two-month low. Concerns about the continuation of COVID-19 lockdowns in areas of Australia hurt the Australian dollar, which slipped 0.3 percent to $0.75580. Fears about the virus spreading also weighed on oil prices, which fell for a second day as investors fretted about slower growth in fuel demand. Brent crude down 0.2 percent to $74.54 per barrel, while light crude in the United States fell 0.1 percent to $72.82 per barrel. At $1,768.10 per ounce, spot gold was down 0.6 percent. Tom Arnold in London and Paulina Duran in Sydney contributed reporting, and Shri Navaratnam and Emelia Sithole-Matarise edited the piece. Continue reading
