Tuesday, 27 July 2021

US stocks rise but face “most formidable version” of COVID-19

Markets were mixed on Monday.

The S&P 500 rose 0.2 percent to a record high but the STOXX Europe 600 dipped 0.1 percent.

Asian stocks were also mostly lower. The Shanghai Composite tumbled 2.3 percent and the Hang Seng plunged 4.1 percent but the Nikkei 225 rose 1.0 percent on its return to trading.

Craig Johnson, chief market technician at Piper Sandler, said that US stocks “remain resilient” as an “impressive start to earnings season has kept the buy the dip sentiment alive”.

Indeed, investors shrugged off a report showing that new home sales in the US unexpectedly fell 6.6 percent in June.

In the meantime, David Kostin, Goldman Sachs’ head of US equity strategy, said that rising infections from the Delta variant of the COVID-19 virus “should not pose a major market risk”.

That remains to be seen, though, as many are considering the re-imposition of mask requirements, social distancing and other measures as vaccinations are proving to be less effective in stemming the disease than previously hoped.

Reuters reports that in Singapore, where Delta is the most common variant, three quarters of COVID-19 cases occurred among vaccinated individuals while in Israel, 60 percent of hospitalised cases are in vaccinated people.

“The last thing you want is to loosen restrictions when you're confronting the most formidable version of the virus yet,” said Eric Topol, director of the Scripps Research Translational Institute in La Jolla, California.

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