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Stocks extend their rebound with technology; Fall in bonds: market envelope

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(Bloomberg) – US stocks have rebounded along with stocks around the world on optimism that the omicron variant will not derail global growth. T-bills fell, sending two-year yields to their highest since March 2020.

The S&P 500 jumped 2.2% to the highest level since the emergence of the new virus strain that rocked markets on November 26. Tech stocks that suffered the brunt of last week’s selling led the rebound, with retail favorites including GameStop Corp. leaping at least 4% and the Nasdaq 100 gaining 2.8%. Chinese stocks led a rally in emerging markets after policymakers in the country decided to extend their support for the economy. Bitcoin rallied, the dollar plunged, and crude exceeded $ 72 a barrel in New York City.

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Risk assets are recovering this week after initial data showed that the surge in omicron cases has not overwhelmed hospitals and that China’s measures are helping to regulate markets plagued by bouts of volatility. Tech stocks had sold last week amid a combination of concerns about the variant and the hawkish Federal Reserve tilt.

“This morning’s rally is fueled by the belief that the omicron variant will not create many problems for the global economy and that China has promised measures to support economic growth,” wrote Matt Maley, chief strategist of the markets for Miller Tabak + Co. “If these are the reasons the market has seen such a steep increase in volatility since Thanksgiving, we agree the worst is probably over and investors should come back to the market with both feet. .

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On the data front, the US trade deficit narrowed while third-quarter productivity fell. Private consumption was the main contributor to the most recent economic expansion in the euro area. UK house prices are at an all time high. And China’s exports grew faster than expected to hit a record high foreign demand and lower electricity.

Meanwhile, research has shown that a Covid-19 vaccine from GlaxoSmithKline Plc and Medicago Inc. of Canada is effective against several variants of the disease.

“Following the steep losses last week, the market mood was markedly more optimistic this week after several health experts around the world, including Dr Anthony Fauci of the United States, said that Omicron symptoms seemed milder so far, ”said Fiona Cincotta. , Senior Financial Markets Analyst at City Index. “While it’s still early days, the encouraging news has prompted bargain hunters to act. Who would want to miss the possibility that a milder variant could speed up natural immunity against Covid?

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However, equity markets could experience further turmoil amid new restrictions aimed at stemming the spread of the omicron and resurging geopolitical tensions. US and European allies are considering banking sanctions if Russia invades Ukraine. China has threatened the United States with retaliation for its decision to declare a diplomatic boycott of the Winter Olympics. And Treasury Secretary Janet Yellen said the United States’ dependence on foreign supply chains has proven to be a vulnerability, reinforcing policies that can be seen as protectionist.

Elsewhere, China’s real estate debt crisis continues to be closely watched as the China Evergrande group’s grace period for some coupons has ended with some bondholders yet to receive payment and S&P stating that a default appears inevitable. A group of bondholders from Kaisa Group Holdings Ltd. sent the company a formal forbearance proposal, designed to save the developer time and avoid default.

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Here are some key events to watch out for this week:

Reserve Bank of India rate decision Wednesday Olaf Scholz is expected to replace Angela Merkel as Chancellor Wednesday European Central Bank President Christine Lagarde speaks at a conference Wednesday Federal Reserve Bank of Minneapolis President , Neel Kashkari, speaks Thursday Bank of Australia Governor Philip Lowe speaks Thursday China CPI, PPI, money supply, new yuan loans, global funding Thursday United States CPI Friday

For more market analysis, read our MLIV blog.

Some of the main movements in the markets:

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The S&P 500 rose 2.2% at 11:06 a.m. New York time The Nasdaq 100 rose 2.8% The Dow Jones Industrial Average rose 1.6% The Stoxx Europe 600 rose 2.4% The MSCI World index increased by 2.2%

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Currencies

Bloomberg Dollar Spot Index fell 0.1% Euro fell 0.3% to $ 1.1247 British pound fell 0.1% to $ 1.3247 Japanese yen fell 0 , 1% to 113.62 per dollar

Obligations

The 10-year Treasury bill yield rose two basis points to 1.45% Germany’s 10-year yield rose two basis points to -0.37% The 10-year yield of Germany Britain was little changed at 0.74%.

Merchandise

West Texas Intermediate crude rose 4.8% to $ 72.80 per barrel Gold futures rose 0.2% to $ 1,783.70 per ounce

Merchandise

West Texas Intermediate crude rose 3.6% to $ 71.97 per barrel Gold futures rose 0.2% to $ 1,782.30 per ounce

© 2021 Bloomberg LP

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