LONDON / SYDNEY – Global stocks held below record highs on Tuesday, while anticipation of an earlier drawdown by the Federal Reserve kept investors cautious, pushing the US dollar to a four-month high against to the euro.
Markets awaited U.S. inflation figures on Wednesday, looking for more indications of when the world’s largest economy could begin to withdraw stimulus after tapering talks were fueled by strong data from job.
MSCI’s All Country World Index, which tracks stocks in 49 countries, was up 0.1% on the day, below the all-time highs scaled last week.
European stocks rose to new all-time highs, with the STOXX 600 0.2% stronger, extending gains to a seventh straight session, driven by travel and leisure companies.
MSCI’s broader Asia-Pacific equity index outside of Japan rose 0.4% after trading much of the day in the red as concerns about the spread of the Delta variant of COVID-19.
China reported more COVID-19 infections on Monday in what appears to be its most severe resurgence of the disease since mid-2020, as some cities added massive rounds of testing in a bid to eradicate the infections.
Nasdaq futures rose 0.1% and S&P 500 futures were flat.
Gold prices rebounded after hitting a four-month low on Monday, when data showed US job openings spiked to a new record in June and hiring also increased.
XAU Spot Gold = up 0.3% to $ 1,733.20 per ounce
That followed Friday’s non-farm payroll report that showed jobs rose 943,000 more than expected in July.
Two Fed officials said Monday that while the labor market still has room for improvement, inflation is already at a level that could meet one of the stages of a key test for the start of interest rate hikes. .
“If markets quickly decide to price on a move at the September FOMC meeting, look for another rally in the US dollar, a jump in US yields finally, and perhaps a tough day in the office for stocks,” Jeffrey said Halley, OANDA Senior. market analyst in Asia Pacific.
After strengthening on Friday and Monday, the dollar index peaked at 93.02 during Asian business hours on Tuesday, an 18-day high.
The euro hit a fresh four-month low against the dollar, with the pair changing hands at $ 1.1726.
Analysts said the dollar was receiving support from strong US bond yields.
The 10-year benchmark yield, which reached its highest level since July 16 on Monday of 1,331%, was the latest at 1,317%.
In Europe, Germany’s 10-year Bund benchmark yield was slightly lower on the day at -0.46%, but six basis points above the six-month lows reached last week.
“Having gone from a very pro-inflation view this year to a very deflated view for up to a week or so, what we’re getting now is another rotation in some of the reflation operations,” said Sean Darby, strategist at Jefferies. In Hong Kong.
“The only thing different between now and the last 12 to 19 months is that it is likely to be accompanied by a stronger dollar.”
In addition to US inflation figures to be released on Wednesday, investors are also considering progress on a $ 1 trillion infrastructure package that has yet to go through the house.
Oil prices rose more than 1% on Tuesday, recovering some of the losses from the previous session when prices hit a three-week low.
US crude oil futures were trading at $ 66.98 a barrel, an increase of $ 0.5 or 0.75%. Brent crude was at $ 70.09, up 1.54%. US oil rose 2% to $ 67.78 a barrel.
(Reporting by Paulina Duran in Sydney and Matt Scuffham in New York; Edited by Shri Navaratnam, Jacqueline Wong and Raissa Kasolowsky)