NEW YORK: Global equity markets recovered from one-month lows on Monday as robust U.S., China and euro zone factory data offset news of new COVID-19 lockdowns, while the dollar and gold rose on U.S. presidential election jitters.
U.S. manufacturing activity accelerated more than expected last month, with new orders jumping to their highest in nearly 17 years, while Chinese factory activity expanded at its fastest pace in a decade and euro zone manufacturing also quickened.
The PMI surveys eased growing concerns about global growth in the face of a resurgent pandemic that had pushed MSCI’s world equity index down almost 8% over the prior three weeks.
Still, the dollar hit one-month highs against a basket of peers as risk sentiment soured on fears of a contested election in the United States and as expected volatility in major currencies rose to its highest level since April.
U.S. Treasury yields mostly drifted lower as investors braced for an eventful week with central bank meetings by the Federal Reserve, Reserve Bank of Australia and Bank of England, as well as the release of U.S. jobs data for October.
“While Election Day looms, investors seem to be focused on potential central bank moves” as the RBA on Tuesday and BofE on Thursday will likely enhance monetary easing programs, said Yousef Abbasi, global market strategist at StoneX Group Inc in New York.
Driving equity markets were moves into beaten-down financial and energy value stocks, while tech-led growth stocks lagged, which Abbasi said was part of a global trend.
MSCI’s global benchmark of equity performance in 49 countries advanced 1.21% to 557.64 and its index for emerging markets stocks rose 1%.
Europe’s broad FTSEurofirst 300 index closed up 1.59% at 1,346.48, while on Wall Street the Dow Jones Industrial Average rose 1.69%, the S&P 500 gained 1.19% and the Nasdaq Composite added 0.17%.
Analysts are concerned that an unclear election outcome could cloud the prospect for more fiscal stimulus, which likely will depend on which party has a Senate majority.
Republican President Donald Trump trails Democratic challenger Joe Biden in national opinion polls, but polls in the swing states that will decide the election show a closer race.
The VIX volatility index , which rose to its highest in four months last week, eased almost half a point to 37.55.
Crude prices rebounded to settle more than 2% higher after earlier trading sharply lower as renewed coronavirus lockdowns in Europe and parts of the United States have dimmed the outlook for fuel consumption, keeping crude prices well under $40 a barrel.
Brent crude futures rose $1.03 to settle at $38.97 a barrel. U.S. crude futures settled up $1.02 at $36.81 a barrel.
Brent earlier had slumped to $35.74 a barrel, a level not seen since late May. U.S. crude slid as low as $33.64.
More than 46 million people have been infected globally and over 1.2 million have died from COVID-19, according to a Reuters tally. The United States leads the world with more than 9 million cases and 230,000 deaths.
In currencies, the UK pound fell 0.34% to $1.2897 after hitting its lowest in almost four weeks on news of a new national lockdown. The euro was last down 0.12%, at $1.1633.
The Japanese yen weakened 0.14% versus the greenback to 104.80 per dollar.
Spot gold prices rose 0.88% to $1,894.46 an ounce. U.S. gold futures settled up 0.7% at $1,892.50.
Yields on the 10-year U.S. Treasury note fell 1.6 basis points to 0.8434%.
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