LONDON (Reuters) – Global equities and the dollar rose on Friday as hopes of an economic recovery and a week-long decline in global bond market yields helped lift 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 in the Suez Canal, and the overall number of COVID-19 cases is rising again.
Asian equities recovered to a three-month low overnight as Chinese markets bounced back from their latest worries about US relations, while a nearly 3% rise in commodity stocks and a weak euro put Europe on course for the fourth consecutive weekly increase.
Eurozone bond yields have risen, but German benchmark bonds have been set for best weekly performance in 3-1 / 2 months as the bloc’s coronavirus problems have sustained its safe haven assets.
Euro fights are also part of this, but the dollar bulls are again charged, with the US vaccination program on the rise. The rise of the green currency has meant that it has almost recovered from the fall of the post-US elections. Emerging market currencies had the worst time of the year this week.
“We started in 2020 with the validation of the consensus that the dollar would weaken,” said Indosuez Wealth Management Investment Director Vincent Manuel.
“We woke up in 2021 to the reality that the US is growing much faster than Europe … so we have a massive divergence.”
Bank of America’s weekly cash flow data has shown that global investors have thrown themselves into safety amid this week’s drama. They pumped $ 45.6 billion into cash, the highest since April 2020, when COVID-19 spread like wildfire.
The news flow over the weekend was a little friendlier, though.
U.S. Department of Labor data showed on Thursday that unemployment benefits fell to a one-year low last week, a sign that the U.S. economy is on the verge of growing stronger as the public health situation improves.
The first official press conference of US President Joe Biden was also a boost, as he said he would double his vaccination launch plan after reaching the previous target of 100 million photos 42 days ahead of schedule.
SUEZ STRIFE
Turkey’s markets continued to settle after the 9% pound triggered by the recent dismissal of President Tayyip Erdogan’s head of central bank.
Chinese shares of Bluechip returned more than 2% after a series of three-day losses, which, as in general emerging market shares, left them at the lowest level of the year.
“All the sanctions (on China) so far have been largely symbolic and should have little economic impact. But the Sino-US confrontation affects market sentiment. It could take some time for them to reach any compromise, “said Yasutada Suzuki, head of emerging market investments at Sumitomo Mitsui Bank.
The dollar also rose to a new nine-month high on the Japanese yen from 109.44 yen. Euro licked its wounds at $ 1.1794, after falling to a four-month low on Thursday.
Ongoing efforts of a beached oil tanker in the Suez Canal saw oil prices recover slightly from a 4% drop on Thursday, although they are ongoing for the third consecutive week of losses due to concerns about further demand reduction .
In addition to Europe, major developing economies, such as Brazil and India, are also struggling with a resurgence of COVID-19 cases.
Brent was at $ 62.62, up 1.08%, US crude was up 1.33% last year, at $ 59.35 a barrel, gold was flat and copper, albeit by more than 1% high that day, it was still in its recent range of $ 8,600-9,200 per tonne.
Due to the blockade in Suez, shipping charges for oil tankers have doubled almost this week, and several ships have been diverted away from the vital waterway.
Reporting by Marc Jones; Edited by Andrew Cawthorne