Markets Hit By A New Virus Variant

The global markets were also affected by the key central banks giving thought to tightening monetary policy and the slow pace of vaccinations

 

The three frontline US indices – Dow Jones, S & P 500 and Nasdaq – hit record highs during the fortnight on the back of robust increase in non-farm payroll data and continued weakness in their labour markets, which helps stave off the Federal Reserve from elevating interest rates in the near future. However, the 10-year US treasury yields touched 1.25 per cent, their lowest level since early 2021. This put a damper on the party and eroded a portion of gains from the indices. The Dow Jones, S & P 500 and Nasdaq ended the fortnight with gains of 1.27 per cent, 2.08 per cent and 2.38 per cent, respectively. 

Investors should keep an eye out for the US second quarter earnings season and updates on President Joe Biden’s infrastructure bill. The DAX was up by 0.51 per cent, led by momentum in sectors such as retail, utilities and software. The FTSE 100 index closed in the red, marginally lower by 0.20 per cent. The French stock market benchmark index CAC 40 lost 1.41 per cent during the fortnight as new the Delta variant of the corona virus poses a genuine threat to swift global economic recovery.

China’s services Purchasing Managers’ Index (PMI) fell to a 14-month low of 50.3 in June 2021, signalling slower economic growth. Also, possible policy tightening by Beijing and resurgence of the corona virus cases in South China heavily weighed down sentiments. The Hang Seng, Nikkei and Shanghai Composite indices plunged 6.64 per cent, 3.87 per cent and 2.31 per cent, respectively. Strait Times index gained a mere 0.31 per cent, whereas the BOVESPA index, which represents the Brazilian stock market, dipped by 1.44 per cent due to political woes.

"Investors should keep an eye out for the US second quarter earnings season and updates on President Joe Biden’s infrastructure bill."

During the fortnight, South Korea’s benchmark stock index Kospi recorded a new closing high of 3,305.21, but couldn’t hold on to those levels and ended the fortnight at 3,217.94. The OMX Copenhagen 20 jumped by 3.42 per cent to close at 1,691.92, a few points shy of its 52-week high of 1,713.01. The SET index, SZSE Component index and S & P | ASX 200 slipped by 1.93 per cent, 1.06 per cent and 0.06 per cent, respectively. Rampant spread of the Delta variant worldwide, key central banks giving thought to tightening monetary policy and slow pace of vaccinations exhibit a grim outlook.