LONDON (Reuters) – World equities and the dollar rose in a zigzag pattern on Friday, as hopes of economic recovery and declining yields in the global bond market this week helped to improve the mood.
As the last full week of a hectic first quarter drew to a close, traders were still watching the world’s most expensive traffic jam build up on the Suez Canal and the global COVID-19 case count rising again.
Asian stocks plunged three months overnight, with Chinese markets recovering from their last worries about the US, while a nearly 3% jump in commodity stocks and the weak euro put Europe on the road to a fourth. consecutive weekly discharge.
Eurozone bond yields soared, but German benchmark bonds were set to perform their best weekly performance in 3-1 / 2 months, as the bloc’s coronavirus problems supported its safe-haven assets.
The euro’s struggles are also part of that, but the dollar’s optimists are again under pressure, with the US vaccine program booming. The dollar’s rise on Friday meant it had almost recovered from the fall after the United States elections. Emerging market currencies had their worst season of the year this week.
“We left 2020 with the validation of the consensus view that the dollar would weaken,” said the investment director at Indosuez Wealth Management, Vincent Manuel.
“We woke up in 2021 to the reality that the United States is growing much faster than Europe … so we have a huge divergence.”
Weekly cash flow data from Bank of America showed that global investors are chasing security amid this week’s drama. They injected $ 45.6 billion in cash funds, the largest since April 2020, when COVID-19 was spreading like wildfire.
However, the flow of news at the end of the week has been a little more friendly.
US Department of Labor data on Thursday showed that unemployment benefit claims fell to a year-low last week, a sign that the US economy is on the verge of stronger growth as the public health situation improves.
The first formal press conference by US President Joe Biden was also an incentive, as he said he would double his vaccination plan after reaching the previous goal of 100 million shots 42 days ahead of schedule.
SUEZ STRIFE
Turkish markets continued to settle after the 9% drop in the lira, triggered by the latest resignation of President Tayyip Erdogan’s head of the central bank.
Bluechip’s Chinese shares also rebounded more than 2% after a three-day losing streak, which, like holdings in emerging markets in general, left them at the lowest level of the year.
“All the sanctions (against China) so far have been largely symbolic and are expected to have little economic impact. But the Chinese-American confrontation is affecting market sentiment. It may take some time for them to reach an agreement, ”said Yasutada Suzuki, head of investment in emerging markets at Sumitomo Mitsui Bank.
The dollar also rose to a new nine-month high against the Japanese yen, at 109.44 yen. The euro licked its wounds at $ 1.1794, after falling to a four-month low on Thursday.
Ongoing efforts to dislodge a tanker stranded in the Suez Canal saw oil prices rebound somewhat from the 4% drop on Thursday, although they are underway for their third consecutive week of losses due to concerns about further reduction in demand.
In addition to Europe, the main developing economies, such as Brazil and India, are also struggling with the resurgence of COVID-19 cases.
Brent was at $ 62.62, up 1.08%, U.S. oil rose 1.33% to $ 59.35 a barrel, gold was flat and copper, although more than 1% higher on the day , was still in its recent range of $ 8,600 – $ 9,200 per ton.
Recovering from the Suez blockade, shipping fees for oil product tankers have almost doubled this week, and several ships have been diverted from the vital waterway.
Marc Jones reporting; Andrew Cawthorne edition