The S&P 500 SPX, +0.13 percent was set to open flat to begin the second half of the year after setting another record close on Wednesday — its 33rd of 2021. In a bullish first half of the year, the index soared 14%. Key economic data — a manufacturing report on Thursday and nonfarm payrolls on Friday — might shape how the third quarter begins for markets, while an OPEC+ meeting will also be watched intently.
Another important element to consider is the delta version of the coronavirus that causes COVID-19, which has weighed heavily on European stocks in recent sessions. The variation, which was first discovered in India, is already prevalent in the United Kingdom and is spreading to other nations such as Germany, Italy, and France. The variant has been found in 96 countries, according to the World Health Organization, while the US Centers for Disease Control and Prevention has categorized it as a ‘concerning’ variant, claiming it accounts for 20% of all U.S. cases late last month. So, how does the delta variation affect stock prices? In our call of the day, JPMorgan strategists responded to this question: According to a note, the version poses no risk to markets and could even benefit value stocks and yields. “The delta variant should not have significant repercussions for the pandemic situation in developed markets (e.g., Europe and North America, which have [made] strong progress in vaccinations) due to the level of population immunity,” said the strategists, led by Marko Kolanovic, chief global markets strategist. They claimed that the market was reacting to suspicions about the delta variant in the same manner that it reacted to concerns about the alpha variation (B.1.1.7), commonly known as the U.K. variant, in February, by lowering yields and selling value stocks. However, they believe that market positioning is unjustified, and that it will lead to a rise in bond yields, value, and cyclical equities, as it did earlier this year. “The situation is similar to the B.1.1.7 fear in February, when defensive positioning (bonds, growth stocks) in anticipation of doom resulted in a month-long rally in bond rates, value and cyclical equities, and a decrease in bonds and growth stocks,” they added. As investors evaluate the delta variant, strategists expect the same thing to happen this time. They also pointed out that oil, which is one of the most vulnerable assets to COVID-19, has been untouched by concerns about delta variants. “We remain bullish on reflation, cyclical, and value trades while selling growth and defensive positions,” they continued. After evaluating data from 15 of the most affected countries in June, they got to their conclusion about the delta variant’s influence. Only Russia had a significant increase in fatality rates, but analysts pointed out that the country only vaccinated 14% of its people.
In the 15 nations most hit by the delta variant, the percent change in peak COVID-19 mortality vs. vaccination rate in June was calculated.
JPMorgan Global Markets Strategy is the source of this information.
They pointed out that whereas cases in the United Kingdom have climbed by over 14,000 per day, deaths have increased by by nine per day. A similar scenario emerges in Portugal, where cases have risen rapidly — 900 per day — but deaths have climbed by just one per day. “This is consistent with data showing vaccines successfully prevent worse outcomes in delta variant infections,” they added, noting that the majority of deaths were in persons who had not been vaccinated. Early on Thursday, U.S. stock futures YM00, +0.13 percent ES00, +0.05 percent NQ00, -0.14 percent were neutral, predicting a 24-point increase for the Dow Jones Industrial Average DJIA, +0.61 percent at the open. Across Europe, it was similarly a morning of early gains followed by losses. Despite significant early gains, the German DAX DAX, -0.09% was 0.2 percent lower and the French CAC PX1, +0.04% was unchanged into afternoon trading. The FTSE 100 UKX, +0.55 percent climbed 0.6 percent in the United Kingdom. The commotion In May, pending house sales increased by 8%, compared to a 1% drop predicted by economists polled by MarketWatch. Real-estate transactions are expected to slow in the second half of 2021, according to economists. Late Wednesday, Krispy Kreme priced its initial public offering at $17 per share, well below the estimated range of $21 to $24. Anyone who tries to coerce China will meet “broken heads and carnage,” President Xi Jinping declared at a huge gathering commemorating the ruling Communist Party’s 100th anniversary on Thursday. Gap said on Thursday that it will close all of its physical locations in the United Kingdom and Ireland and transition to an online-only strategy. CureVac CVAC, +8.92 percent, a German biopharmaceutical company, said its COVID-19 vaccine candidate was 48 percent effective in protecting against the disease. In premarket trade, the shares dropped 13%. On Wednesday, shares in Didi Global, a Chinese ride-hailing company, debuted on the New York Stock Exchange with a near 20% gain, but then dropped back to settle just 1% higher than the initial public offering price. According to the Associated Press, Donald Trump’s firm and his top financial officer Allen Weisselberg have been indicted on charges stemming from a New York probe into the former president’s economic practices. Reads at random A man sets a new record for the tallest M&M stack. The victory of England over Germany in the Euros has eased tensions between Prince William and Prince Harry. Need to Know starts early and is updated until the opening bell, but you can sign up to have it delivered to your inbox all at once by signing up here. At around 7:30 a.m. Eastern, the emailed version will be sent out. Do you want to know what’s in store for the rest of the day? Sign up for The Barron’s Daily, a daily investor briefing with exclusive insight from Barron’s and MarketWatch writers./n
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