LONDON (Reuters) – World stocks and the dollar zigzagged higher Friday as hopes for an economic recovery and the week when global bond yields eased helped lift the mood.
As the last full week of a hectic first quarter drew to a close, traders were still looking at the world’s most expensive traffic jam in the Suez Canal, and global COVID-19 cases rose again.
Asian equities hit a three-month low overnight, as Chinese markets recovered from their latest concerns about US relations, while a nearly 3% rise in commodities and a weak euro put Europe on course for a fourth consecutive weekly rise.
Eurozone bond yields were up slightly, but German benchmark bonds were set at their best weekly performance in 3-1 / 2 months as the bloc’s coronavirus woes bolstered its safe-haven assets.
The battle of the euro is also part of that, but dollar bulls are back to work as the US vaccine program ramps up. The dollar’s gains on Friday meant that it almost paid for the post-election decline in the US election. Emerging market currencies have had their worst run of the year this week.
“We left 2020 confirming 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 US 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 looking for safety amid this week’s drama. They pumped $ 45.6 billion in cash, the largest since April 2020, when COVID-19 spread like wildfire.
However, the news flow at the end of the week was a bit more friendly.
Data from the U.S. Labor Department on Thursday showed that unemployment benefit claims fell to a year-long low last week, a sign that the U.S. economy is on the brink of stronger growth as the public health situation improves.
US President Joe Biden’s first formal press conference was also a boost, as he said he would double down on his vaccination plan after reaching the previous target of 100 million shots 42 days ahead of schedule.
SUEZ STRIFE
Turkish markets continued to calm down after the 9% fall in the lira following the latest resignation of President Tayyip Erdogan.
China’s Bluechip stocks also rebounded more than 2% after a three-day loss period that, like emerging market stocks in general, left them at their lowest level of the year.
“All sanctions (against China) so far have been largely symbolic and should have little economic impact. But the confrontation between China and the US is affecting market sentiment. It may take a while for them to reach a compromise, ”said Yasutada Suzuki, Head of Investment in Emerging Markets at Sumitomo Mitsui Bank.
The dollar also rose to a new nine-month high on the Japanese yen of 109.44 yen. The euro licked its wounds at $ 1.1794 after falling to a four-month low on Thursday.
With ongoing efforts to dislodge a stranded tanker in the Suez Canal, oil prices rebounded a bit after a 4% drop on Thursday, although they are on track for their third consecutive week of losses amid concerns about a further decline in the question.
In addition to Europe, large emerging economies such as Brazil and India are also facing a revival of COVID-19 business.
Brent was up $ 62.62, up 1.08%, US crude last rose 1.33% at $ 59.35 a barrel, gold was flat and copper although up more than 1% on the day , was still in its recent range of $ 8,600 – $ 9,200 per ton.
The blockade in the Suez nearly doubled shipping rates for oil product tankers this week, and several ships were diverted from the vital waterway.
Reporting by Marc Jones; Editing by Andrew Cawthorne