LONDON (Reuters) – Stock markets and the dollar zigzagged higher on Friday as hopes for economic recovery and the easing of the global bond market over the week offset tensions from the world’s most costly traffic jam.
As the last full week of a hectic first quarter drew to a close, traders watched desperate efforts to free a stranded supertanker in one of the world’s most vital trading arteries, the Suez Canal, as well as surging global COVID-19 numbers cases .
Chinese markets overnight helped Asia rebound from a three-month low by overcoming their latest concerns about US relations, while a nearly 3% rise in commodities stocks, a weaker euro and positive German data hit Europe. rate for a fourth consecutive weekly rise. [.EU]
Wall Street would be higher at the opening [.N]
Bond yields had also risen slightly this day, but 10-year Treasuries were on track for their largest weekly interest rate drop since June. For German Bunds, it was 3-1 / 2 months as the eurozone’s coronavirus woes support safe harbor assets there. [GVD/EUR]
The struggle of the euro is part of that too, but the dollar bulls were firmly in charge of ramping up the US vaccine program.
The dollar’s 0.3% rise on Friday meant that it had reclaimed almost all of the post-election decline. Emerging market currencies have had their worst run of the year this week, not helped by a nearly 10% drop in the Turkish lira after another central bank governor was fired. [EMRG/FRX]
“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 quickly.
However, the news flow at the end of the week was a bit more friendly.
Business morale in Europe’s largest economy Germany is back to its best in nearly two years thanks to recovering global demand for manufactured goods, data from Friday showed.
According to Thursday’s U.S. Labor Department figures, U.S. unemployment benefits had fallen to a one-year low, while President Joe Biden doubled his short-term goal for U.S. vaccinations to 200 million shots during his first formal press conference as president.
“We now expect the US dollar to get a little stronger in the coming years as the US economy fares better,” Capital Economics analysts said as they revised their forecasts for the dollar upward.
BLOCKED SUEZ
Turkish markets have struggled to calm down after the lira plunged by nearly 10% following the latest resignation of President Tayyip Erdogan, who has raised concerns about a full-blown crisis requiring capital controls. [EMRG/FRX]
“If you can’t raise interest rates and you don’t have enough reserves, then you have no other choice if you want to limit the depreciation of the exchange rate,” said Morgan Stanley’s chief economic adviser and former head of the IMF’s European branch, Reza said. Moghadam.
However, blue chip Chinese equities rebounded by more than 2% after a three-day loss period, which, like emerging market equities 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 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.
With ongoing efforts to dislodge the 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 further decline in demand. [O/R]
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. [/MCU3=LX]
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 and Susan Fenton