Saturday, 31 July 2021

Markets fall, eurozone economy rebounds

Markets fell on Friday.

The S&P 500 fell 0.5 percent, the STOXX Europe 600 fell 0.5 percent and the Nikkei 225 plunged 1.8 percent.

A preliminary estiimate of eurozone GDP growth on Friday showed that the group grew 2 percent in the second quarter, rebounding from contractions in the prior two quarters.

Claus Vistesen, chief Europe economist at Pantheon Macro, said in a note this week that “the third quarter will be even better, as momentum carries over uninterrupted” but added that “new virus cases are now shooting higher — driven by the Delta variant — and evidence from the U.K. suggests that it is holding back economic activity”.

COVID-19 is also a concern in the US, where Brian Belski, chief investment strategist at BMO, suggested that increased concerns over the delta variant and “its potential implications for reopening momentum” seemed to have played a “key role” in market action.

Indeed, it should now be clear to the Centers for Disease Control and Prevention that vaccination alone cannot prevent the spread of the variant after a study of a sample of cases from Massachusetts showed that 74 percent of them were already fully vaccinated while four out of five hospitalisations occurred among the fully vaccinated.

Friday, 30 July 2021

Markets rise, not too concerned with US growth

Markets rose on Thursday.

The S&P 500 rose 0.4 percent, the STOXX Europe 600 rose 0.5 percent and the Nikkei 225 rose 0.7 percent.

Investors shrugged off news that US second-quarter GDP accelerated 6.5 percent on an annualised basis, considerably less than the 8.4 percent Dow Jones estimate.

Craig Erlam, senior market analyst at Oanda, said that the less-than-expected GDP growth “was due to a drop in inventories so nothing to be too concerned about”.

Thursday, 29 July 2021

Markets mixed, Fed “some way away” from goal

Markets were mixed on Wednesday.

The S&P 500 was flat, the STOXX Europe 600 rose 0.7 percent and the Nikkei 225 fell 1.4 percent.

The Federal Reserve kept interest rates in a target range near zero, reiterating its view that the economy continues to “strengthen” despite the spread of the Delta variant of COVID-19.

“We have some ground to cover on the labor market side,” said Fed Chairman Jerome Powell in a press conference. “I think we’re some way away from having had substantial further progress toward the maximum employment goal.”

Wednesday, 28 July 2021

Markets fall, CDC reverses mask recommendation for vaccinated people

Markets fell on Tuesday.

The S&P 500 fell 0.5 percent, snapping a five-day winning streak. The STOXX Europe 600 also fell 0.5 percent.

“Market volatility is on the rise, as worries about new virus strains have been exacerbated by stretched positioning and light summer trading,” Jean Boivin, head of BlackRock Investment Institute, said in a note.

Indeed, the Delta variant of the COVID-19 virus has forced the Centers for Disease Control and Prevention to acknolwedge what had already been known elsewhere: that vaccination alone is not enough to halt the spread of the disease.

“In recent days I have seen new scientific data from recent outbreak investigations showing that the Delta variant behaves uniquely differently from past strains of the virus that cause Covid-19,” said CDC Director Dr Rochelle Walensky on Tuesday.

“In areas with substantial and high transmission, CDC recommends fully vaccinated people wear masks in public, indoor settings, to help prevent the spread of the Delta variant and protect others -- this includes schools.”

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.

Monday, 26 July 2021

S&P 500 at new high while COVID-19 spirals "out of control"

The S&P 500 rose 2 percent last week to end at a new all-time high.

The resurgence of COVID-19 in the US has not put investors off stocks, but whether that continues remains to be seen.

On Sunday, Dr Jerome Adams, the former surgeon general during the Trump administration, told CBS News that the pandemic is "spiraling out of control" again.

"More mitigation is coming, whether it's masking or whether it's closures or whether it's your kids having to return to virtual learning, that is coming," said Adams.