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Markets

Stocks mostly higher as recovery hopes offset virus, Fed woes

  • The dollar hit a four-month high against the euro on expectations of tighter monetary policy from the Fed
Published August 10, 2021

LONDON: European and Asian stock markets mostly rose Tuesday as hopes for the long-term global outlook offset concern about the fast-spreading Delta variant and expectations that the Federal Reserve will soon begin withdrawing its vast financial support.

Oil prices recovered from heavy losses on Monday that had been attributed to fears about the impact on demand of new coronavirus lockdowns.

The dollar hit a four-month high against the euro on expectations of tighter monetary policy from the Fed.

"A stronger dollar theme is starting to emerge given the recovery story in the US and that might be a short-term drag for crude prices", said Edward Moya, market analyst at OANDA trading group.

While vaccinations are being rolled out, infection rates continue to climb around the world, forcing some governments -- particularly China and Australia -- to impose fresh lockdowns and other containment measures.

That has led some observers to re-evaluate the outlook for growth.

However, at the same time, the US recovery appears to be on track, with the economy adding more than 1.8 million jobs in June and July and some of the world's top companies reporting healthy earnings.

With inflation hitting multi-year highs, the Fed is coming under pressure to rein in prices by tapering the ultra-loose monetary policies put in place at the start of the pandemic, with observers betting on a rise in interest rates in late 2022.

European stocks open mixed tracking global data

"Investors should understand that a potential strength in inflation may force the Fed to speed up its timeline for tapering its massive bond purchases, which have helped stimulate the US economy since the onset of the coronavirus pandemic," said Naeem Aslam, market analyst at Avatrade.

"These unprecedented stimulus measures aided in the uptick of liquidity, allowing stock markets to reach new highs."

Atlanta Fed President Raphael Bostic on Monday said the central bank's goals of taming unemployment and long-term hot inflation were close.

Analysts said the likelihood that the Fed will taper its vast bond-buying scheme was strong. Keenly awaited US inflation data are scheduled to be published on Wednesday.

Key figures around 1045 GMT

London - FTSE 100: DOWN 0.1 percent at 7,125.48 points

Frankfurt - DAX 30: UP 0.2 percent at 15,770.94

Paris - CAC 40: UP 0.1 percent at 6,819.84

EURO STOXX 50: UP 0.3 percent at 4,188.86

Tokyo - Nikkei 225: UP 0.2 percent at 27,888.15 (close)

Hong Kong - Hang Seng Index: UP 1.2 percent at 26,605.62 (close)

Shanghai - Composite: UP 1.0 percent at 3,529.93 (close)

New York - Dow: DOWN 0.3 percent at 35,101.85 (close)

Euro/dollar: DOWN at $1.1725 from $1.1744 at 2050 GMT

Pound/dollar: UP at $1.3859 from $1.3845

Euro/pound: DOWN at 84.61 pence from 84.75 pence

Dollar/yen: UP at 110.46 yen from 110.35 yen

Brent North Sea crude: UP 1.5 percent at $70.05 per barrel

West Texas Intermediate: UP 1.8 percent at $67.69 per barrel

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