Wall Street poised to open higher, oil surges, even as Delta fears persist
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LONDON, Aug.23 (Reuters) – Shares rose and risk appetite in global markets increased on Monday, but concerns over the COVID-19 Delta variant hampering economic growth persisted as investors assessed a possible timetable for reducing monetary stimulus.
After worries about slowing growth pushed stocks and oil prices down last week, they picked up in Asian and European trade.
The MSCI World Stock Index (.MIWD00000PUS), which tracks stocks from 50 countries, rose 0.4% at 10:40 a.m. GMT, recovering after experiencing its biggest weekly decline since June last week.
The European STOXX 600 was up 0.6% (.STOXX) and US equity futures were up around 0.3%,.
Oil prices rose, breaking their seven-day losing streak. Brent crude rose 3.1% and US West Texas Intermediate crude rose 3%, after both marking their biggest week of losses in more than nine months last week as markets braced for a weakened fuel demand due to an increase in viral infections. Read more
In foreign currencies, the dollar index was at 93.311, down 0.2% on the day, from its nine-month high of 92.734 reached on Friday.
“Following the corrections we’ve seen over the past week, it’s really a rebound,” said Marco Willner, head of investment strategy at NNIP.
“People are looking at Jackson Hole, people are looking at the Delta variant as well, so the factors haven’t changed – it’s a technical rebound.”
Data from the PMI survey showed business activity in the eurozone rose sharply in August – although fears that new strains of coronavirus could lead to further restrictions limited optimism. Read more
Activity in the German manufacturing and service sectors increased in August, according to PMI surveys, although the pace of growth declined slightly. Read more
“Concerns about the impact of the Delta variant and input shortages persist but have not derailed the rebound so far,” wrote ING senior economist Bert Colijn in a note to clients.
Germany’s benchmark 10-year yield was at -0.465%, while the US 10-year yield was at 1.2784%, having lacked direction over the past week.
The spread of the Delta variant has the potential to upend the timing of the U.S. Federal Reserve’s plans to scale back its bond buying program.
Dallas Federal Reserve Chairman Robert Kaplan, among the U.S. central bank’s strongest supporters for starting to cut back support for the economy, said on Friday he may have to adjust that view if the Delta variant of the coronavirus significantly slowed economic growth. Read more
Markets will be paying attention to Fed Chairman Jerome Powell’s speech in Jackson Hole this week, although investors looking for clear guidance on tapering may be disappointed. Read more
“One of the key questions will be when the tapering begins. I think it’s not a done deal that Powell will comment on this this week – he could wait until September, maybe even until. ‘in November, [to] make a major announcement around this one, ”said Willner of NNIP.
Expectations that the US Fed will ease monetary stimulus sooner than the European Central Bank have helped the dollar strengthen against the euro in recent weeks, with the euro hitting a nine-month low at 1.1664 $ Friday. It was up 0.2% to $ 1.1719 by 10:49 am GMT on Monday.
Elsewhere, bitcoin broke above $ 50,000 during trading hours in Asia and rose 1.9% on the day to around $ 50,249. The cryptocurrency hit a record high of 64,895.22 in April, fell sharply in May, and has gradually recovered since mid-July.
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Reporting by Elizabeth Howcroft Editing by Nick Tattersall and Bernadette Baum
Our Standards: Thomson Reuters Trust Principles.