LONDON (Reuters) – Stock markets and the dollar rose in a zigzag manner on Friday, as hopes of economic recovery and declining global bond market earnings this week offset tensions from increased spending congestion. of the world.
As the entire last week of a hectic first quarter drew to a close, traders were watching desperate efforts to free a supertanker stranded in one of the most vital commercial arteries in the world, the Suez Canal, as well as the growing global count of COVID-19 cases.
Chinese markets helped Asia recover from a 3-month low overnight, overcoming its latest concerns about the US, while a nearly 3% jump in commodity stocks, a weaker euro and optimistic data from Germany maintained Europe underway for a fourth consecutive weekly increase. [.EU]
Wall Street was expected to rise further at the opening [.N].
Bond yields also rose slightly on the day, but 10-year Treasury bonds were on their way to their biggest weekly yield drop since June. For German bonds, it was 3-1 / 2 months, as eurozone coronavirus problems underpin safe haven assets there. [GVD/EUR]
The euro’s struggles are also part of this, but dollar optimists were firmly in charge of the United States’ vaccination program.
The dollar’s 0.3% rise on Friday means it has recovered almost all of its decline after the United States elections. Emerging market currencies, by contrast, had their worst run of the year this week, unaffected by a nearly 10% drop in the Turkish lira following the resignation of another central bank governor. [EMRG/FRX]
“We left 2020 with the validation of the consensus view that the dollar would weaken,” said Vincent Manuel, chief investment officer at Indosuez Wealth Management.
“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 rapidly.
However, the flow of news at the end of the week has been a little more friendly.
Business morale in Europe’s biggest economy, Germany, is back to its best in almost two years, thanks to the recovery in global demand for manufactured goods, data showed on Friday.
US Department of Labor figures on Thursday showed that US unemployment insurance claims fell to a year-low, while President Joe Biden doubled his US vaccination target to 200 million vaccines in his first formal press conference as president.
“We now expect the US dollar to strengthen somewhat over the next two years as the US economy outperforms,” said analysts at Capital Economics as they raised their projections for the dollar.
SUEZ BLOCKED
Turkey’s markets were struggling to stabilize after the nearly 10% lira drop, triggered by the latest resignation of President Tayyip Erdogan’s central bank president, who raised concerns about a total crisis that would require capital controls. [EMRG/FRX]
“If you can’t raise rates and you don’t have enough reserves, then you have no other choice if you want to limit exchange rate depreciation,” Morgan Stanley’s chief economic advisor and former head of the European IMF department, Reza Moghadam , said.
Chinese top-tier stocks rebounded by more than 2%, although 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 of 109.44 yen. The euro licked its wounds at $ 1.1794, after falling to a four-month low on Thursday.
Ongoing efforts to dislodge the oil tanker in the Suez Canal have seen oil prices recover 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 oil prices. demand. [O/R]
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. [/MCU3=LX]
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; Editing by Andrew Cawthorne and Susan Fenton