NEW YORK: Global equity benchmarks and oil prices rose on Friday while safe havens such as the dollar and U.S. Treasuries dipped as hopes for a global economic recovery overshadowed the continued blockage of one of the world’s most vital shipping lanes.
More than 30 oil tankers are waiting to traverse the Suez Canal, which has been blocked since Wednesday after a container ship ran aground. It may take weeks to free the beached vessel, though analysts said low seasonal demand for oil may mitigate the impact of the blockade.
The dollar rose to a nine-month high against the Japanese yen of 109.44 yen, reflecting investor expectations of robust U.S. economic growth as it accelerates its vaccine rollout. Overall, the dollar index, which measures the greenback against a basket of six major currencies, fell 0.037%, with the euro up 0.2% to $1.1787.
“We left 2020 with the validation of the consensus view the dollar would weaken,” said Vincent Manuel, chief investment officer at Indosuez Wealth Management.
“We have woken up in 2021 facing the reality that the U.S. is growing much quicker than Europe… so we have a massive divergence.”
MSCI’s gauge of stocks across the globe gained 0.50% following broad gains in Europe and Asia.
Business morale in Europe’s biggest economy, Germany, is back to its best in almost two years thanks to recovering global demand for manufactured goods, data showed on Friday.
In afternoon trading on Wall Street, the Dow Jones Industrial Average rose 79.08 points, or 0.24%, to 32,698.56, the S&P 500 gained 9.64 points, or 0.25%, to 3,919.16 and the Nasdaq Composite dropped 90.20 points, or 0.7%, to 12,887.48.
Bond yields were slightly up on the day, but 10-year U.S. Treasuries were on track for their biggest weekly yield drop since June.
Benchmark 10-year notes last fell 12/32 in price to yield 1.6565%, from 1.614% late on Thursday.
Weekly money flow data from Bank of America showed global investors have been darting for safety this week amid concerns over rising coronavirus cases in Europe and the potential for global shipping to slow given the blockade of the Suez Canal. They pumped $45.6 billion into cash funds, the largest since April 2020, when COVID-19 was spreading quickly.
Turkey’s markets were struggling to settle after the lira’s near 10% slump triggered by President Tayyip Erdogan’s latest central bank chief sacking, which has raised worries about a full-blown crisis that would require capital controls. [EMRG/FRX]
Blue chip Chinese stocks rebounded more than 2% after a three-day losing streak, which, like emerging market shares generally, had 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-U.S. confrontation is affecting market sentiment. It could take some time for them to come to any compromise,” said Yasutada Suzuki, head of emerging market investment at Sumitomo Mitsui Bank.
U.S. crude recently rose 3.91% to $60.85 per barrel and Brent was at $64.34, up 3.86% on the day.
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