LONDON (Reuters) – Stock markets and the dollar zigzagged on Friday as hopes of economic recovery and easing yields on weekly bond yields offset traffic jams with more spending in the world.
As the last full week of a hectic first quarter came to an end, traders watched desperate efforts to release a silver supertanker into one of the world’s most vital trading arteries, the Suez Canal, as well as the rising world count. of COVID-19 cases. .
Chinese markets had helped Asia recover from the 3-month low overnight overcoming its latest U.S.-related concerns, while a 3% jump in commodity stocks, a weaker euro and optimism German data kept Europe heading for a fourth consecutive weekly rise. [.EU]
Wall Street was expected to rise further at the opening [.N].
Bond yields also rose slightly on the day, but 10-year Treasuries followed the good fall in weekly yields since June. For the German federations it was 3-1 / 2 months, as the eurozone coronavirus problems support the shelter assets there. [GVD/EUR]
The struggles for the euro are also part of it, but the dollar numbers were firmly at the forefront of the U.S. vaccination program.
The 0.3% increase in the greenback on Friday meant it had recovered almost all of its fall after the U.S. election. In contrast, emerging market currencies have had the worst performance of the year this week, unaided by a collapse of close to 10% in the Turkish lira following the removal of another central bank governor. [EMRG/FRX]
“We came out of 2020 with the validation of the consensus view that the dollar would weaken,” said Vincent Manuel, investment director 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 massive divergence.”
Bank of America’s weekly cash flow data showed that global investors have been throwing themselves for safety amid this week’s drama. They spent $ 45.6 billion on cash, the largest since April 2020, when COVID-19 spread rapidly.
The news flow at the end of the week has been a little friendlier.
Business morale in Europe’s largest economy, Germany has returned to its peak in almost two years thanks to the recovery in global demand for manufactured goods, data showed on Friday.
U.S. Department of Labor figures on Thursday saw U.S. unemployment benefit claims hit a one-year low, while President Joe Biden doubled his short-term goal of getting vaccinated to $ 200 million of shots in his first formal press conference as president.
“We now expect the U.S. dollar to strengthen somewhat over the next two years as the U.S. economy outperforms results,” Capital Economics analysts said when raising their green dollar forecasts.
SUEZ BLOCKED
Turkish markets were struggling to settle after the pound fell by nearly 10% triggered by the recent dismissal of President Tayyip Erdogan’s central bank chief, who has raised concerns about a full-fledged crisis that would require capital controls . [EMRG/FRX]
“If you can’t raise rates and you don’t have enough reserves, you have no choice if you want to limit the depreciation of the exchange rate,” said Morgan Stanley, chief economic adviser and former head of the European IMF department. , Reza Moghadam said.
Shares of blue-chip Chinese rose more than 2%, albeit after a three-day streak of losses, which, like emerging market shares in general, had left them at their lowest level in a year.
“All the sanctions (against China) so far have been largely symbolic and should have little economic impact. But the Sino-US confrontation affects market sentiment. It could take a while to reach any compromise, ”said Yasutada Suzuki, head of emerging market investments at Sumitomo Mitsui Bank.
The dollar also rose to a nine-month high against the Japanese yen from 109.44 yen. The euro licked its wounds at $ 1.1794 after falling to a four-month low on Thursday.
Ongoing efforts to evict the oil tanker in the Suez Canal saw oil prices rebound slightly from the 4% drop on Thursday, although they are underway for their third consecutive week of losses due to concerns over a further reduction in demand. [O/R]
In addition to Europe, major developing economies such as Brazil and India are also struggling to resurrect COVID-19 cases.
Brent stood at $ 62.62, up 1.08%, US crude rose 1.33% to $ 59.35 a barrel, gold was flat and copper, though that more than 1% more on the day, was still between its $ 8,600 and $ 9,200 per tonne. [/MCU3=LX]
Due to the blockade in Suez, tanker shipping rates have doubled almost this week and several vessels have been diverted from the vital waterway.
Marc Jones Reports; Edited by Andrew Cawthorne and Susan Fenton