Allaying worries about phasing out US stimulus helps global equities
Global equities, bond yields and oil rose on Tuesday as China’s tech sector rebounded, positive news on vaccination in the United States and allayed concerns about the gradual reduction of stimulus in the United States high sentiment ahead of a speech later this week by Fed Chairman Jerome Powell.
Stocks in Asia, Europe and Wall Street futures all posted gains, putting them on the path to recovery after Chinese regulatory concerns sparked a sell off last week. The largest MSCI index for Asia-Pacific stocks outside of Japan rose 1.7% while in Europe, the pan-European STOXX 600 added 0.2% to the previous session’s gains. Nasdaq and S&P 500 futures rose 0.3% and 0.5% respectively.
“I think the good mood in US stocks is here to stay ahead of the Jackson Hole meeting, because Fed Chairman Jerome Powell could only tone down the hawkish tone of last week’s FOMC minutes, ”wrote Ipek Ozkardeskaya, analyst at Swissquote.
Concerns that the Fed was getting closer to cutting its stimulus measures weighed on global markets last week, but investors are now less confident that Powell’s speech in Jackson Hole will indicate a timeline for the liquidation of the program. Fed bond purchase.
“The increase in covid cases and soft data can only keep the Fed on alert and reluctant to act prematurely. And that’s all the market wants to hear, ”added Ozkardeskaya.
Covid-19 infections caused by the highly contagious Delta variant fueled concerns about the recovery, but the United States Food and Drug Administration yesterday granted full approval to the covid-19 vaccine developed by Pfizer spawned the hope that inoculations could speed up.
Improving sentiment pushed the dollar lower against its Australian and Canadian counterparts as well as the Norwegian krone and the Swedish krona. It hit a five-day low of 92.947 on Monday and saw its biggest single-day decline since May. Last week, the dollar index hit a nine-month high on bets that the Fed would begin to move away from its accommodative monetary policy, but that view began to change on Friday when the Fed chairman of the Dallas, Robert Kaplan, has said he may reconsider his hawkish stance if the coronavirus damages the economy.
Gold prices fell but remained slightly above the key psychological level of $ 1,800 per ounce. (Julien Ponthus in London and Anshuman Daga in Singapore for Reuters)