Global stocks and commodity markets are off to a strong start this week


Stock update

Wall Street stocks jumped to record highs on Monday, and commodity prices rose as global markets kicked off with a bullish momentum this week.

The S&P 500 index rose 1.1% in afternoon trading, while the Nasdaq index, which is dominated by technology stocks, rose 1.6% across the board.

In Europe, France’s Cac 40 index closed up 0.9%, the entire region’s Stoxx 600 index closed up 0.7%, Frankfurt’s Dax index and the UK’s FTSE 100 index both rose 0.3%. In Asia, Hong Kong’s Hang Seng Index closed up 1.1%, while Japan’s Nikkei 225 Index closed up 1.8%.

Oil and other commodity prices rebounded after the sell-off last week. The international oil benchmark Brent crude oil rose by more than 5%, returning to over US$68 per barrel. Traders pointed out that the decline in China’s Covid-19 cases indicates that social restrictions in the world’s largest consumer of commodities may soon be relaxed . The opening price of Brent crude oil this month was US$76 per barrel.

Energy stocks led gains in New York on Monday, with the S&P 500 index tracking the industry’s gains of 4%.

Metal prices also recovered from last week’s decline, with nickel rising 3% and copper rising 2%. Commerzbank analysts said that rising Asian stock prices and a weaker U.S. dollar provided support for metals.

Goldman Sachs said that China’s demand for metals remains strong and inventories are rapidly declining. The bank said it expects copper prices in the fourth quarter to rise from the current US$9,218 per ton to US$10,620 per ton.

As commodity prices rose, the U.S. dollar fell by about 0.5% against a basket of six world currencies. A weaker dollar is good for assets denominated in that currency because it makes prices cheaper for international buyers.

But after the Morgan Stanley Capital International Global Equity Benchmark Index hit its worst week in two months, investors remained cautious.

Anthony Collard, managing director of JP Morgan Private Bank, said of the rally: “I don’t think the market behavior tells us anything new is happening.” “To some extent, this It’s a kind of mean reversion.”

The European Purchasing Managers Index data-a broad indicator of the health of companies-portrays a mixed picture of the market as a whole. In the UK, the manufacturing and service industries are facing a sharp slowdown in growth, falling to their lowest level in six months.

Data from Australia also showed that the country’s private sector lost momentum in August due to the spread of the Coronavirus Delta variant and the resulting blockade.

In contrast, business activity in the Eurozone has grown at one of the fastest rates in the past 20 years, and employment continues to grow at the same rate as in June, setting a 21-year high.

Chris Williamson, Chief Business Economist at IHS Markit, said: “Although the spread of Delta variants has caused widespread problems throughout the region, suppressing demand and causing further supply problems, companies have benefited from the relaxation of virus control measures until the beginning of the pandemic. The lowest level ever.”

The major event for investors this week is the annual Central Bank Governors Symposium to be held in Jackson Hole, Wyoming, starting on Thursday. Disagreements within the Fed on the speed of reducing government debt purchases have increased the interest of the monetary policy makers meeting.

Since the impact of the coronavirus lockdown more than a year ago, the Fed’s $120 billion monthly asset purchase plan has been an important pillar of market recovery.The minutes of the Fed’s meeting released on Wednesday last week showed that most Fed officials It is believed that the withdrawal of the stimulus plan may begin later this year.

Additional reporting by David Shepard and Henry Sanderson


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