LONDON / TOKYO (Reuters) – Global stocks hung to record highs on Monday, with concerns over the Delta variant of COVID-19 offsetting positive sentiment resulting from the surge in eurozone trade activity and a welcome report on employment in the United States.
The STOXX index of Europe’s top 600 companies remained stable, reversing earlier losses after data showed eurozone companies grew their business at the fastest pace in 15 years in June.
UK service company activity also picked up in June, albeit at a slightly slower pace.
French stocks fell 0.4% as Health Minister Olivier Veran warned France could be heading for a fourth wave of the pandemic due to the highly transmissible Delta variant.
COVID-19 angst has also weighed on Japanese stocks, with the Nikkei falling 0.6%, to a two-week low, following a spike in infections in Tokyo, just weeks before the city does host the Olympics.
The largest MSCI index of Asia-Pacific stocks outside of Japan remained stable.
China’s blue-chip stock index recovered from earlier losses to close 0.1% higher, as Beijing pledges to continue political support for its tech sector helped to counter concerns about the giant’s crackdown. Didi Global carpooling and scrutiny of other platform companies around the country.
The MSCI All Country World Index closed at a record 724.66 last week and was up 0.1% on Monday.
Trading was smoother than usual, with US markets closed for the extended July 4th weekend.
“The markets in general are always trying to find their feet,” said James Athey, chief investment officer, Aberdeen Standard Investments.
“Stocks, of course, continue to ignore or ignore anything that could be considered slightly negative as they continue their happy and complacent dance towards an inevitable calculation.”
Futures on the S&P 500 reported a decline of 0.1% for Tuesday’s open, after the index closed 0.8% higher to a record high on Friday. The Dow Jones Industrial Average rose 0.4% and the Nasdaq Composite added 0.8% to also hit a record high. [.N]
The non-farm payroll in the United States increased 850,000 jobs more than expected last month, according to data on Friday. But the unemployment rate unexpectedly rose to 5.9% from 5.8%, while the closely watched average hourly wage, an indicator of wage inflation, rose 0.3% last month, lower than consensus forecast for an increase of 0.4%.
“The feeling of a golden loop suggests that there is no need to accelerate the reduction schedule or the implied rate hike profile,” wrote Tapas Strickland, an analyst at the National Australia Bank, in a note. customer.
“Overall, the wage bill is still 6.8 million below pre-pandemic levels in February 2020 and still below the level of substantial progress required by the Fed. As such, there is nothing in this report for the Fed to become hawkish. “
All eyes will be on the minutes of the Federal Open Markets Committee meeting last month, when policymakers surprised markets by reporting two rate hikes by the end of 2023.
Comments from Fed officials since then have been more balanced, especially from President Jerome Powell, and investors are analyzing Wednesday’s post for further clues about the timing of the policy tightening.
Eurozone government bond yields rose, but analysts expect the recent downward path to resume after US wage data.
The yield on the 10-year German Bund rose by half a basis point to -0.231%.
The dollar was broadly stable on Monday after falling from a three-month high late last week, under pressure from weaker details in the U.S. payroll report.
The greenback climbed around 0.2% to $ 1.1859 per euro and traded at 111.05 yen.
Gold rose 0.3% to $ 1,792.30 an ounce.
Crude oil was limited as OPEC + talks dragged on. Saudi Arabia’s energy minister on Sunday fended off opposition from another Gulf producer, the United Arab Emirates, to a draft OPEC + deal and called for “compromise and rationality” to reach a deal when the group will meet again on Monday.
Brent crude added 0.1% to $ 76.21 a barrel, and US crude gained 0.1% to $ 75.25 a barrel. [O/R]
Editing by Sam Holmes and Angus MacSwan