Wall Street stocks rebounded after two straight days of decline on Wednesday as sectors poised to benefit from a recovery in the world’s largest economy drove markets higher.
The small-cap Russell 2000 outperformed its Wall Street peers, rising 1.5% at lunchtime in New York. The high-tech Nasdaq Composite climbed 0.8% while the blue-chip S&P 500 advanced 0.7%, with basic materials, energy and industrials among its main sectors.
“The market is grappling with many conflicting scenarios,” warned Toby Gibb, global head of the equity investment leadership at Fidelity. “There are significant differences between countries in terms of vaccine deployment and of course we now have these new variants. [of the virus] to face.
The Japanese cities of Osaka and Tokyo on Wednesday asked the national government for state of emergency decrees due to the increase in the number of cases caused by the new mutations of Covid-19.
India is hit by a devastating second wave, now reporting around 260,000 coronavirus infections and 1,700 deaths per day, as the UK monitors the transmissibility of a variant first discovered in the South Asian country .
In Europe, equity markets made a partial rally after the biggest daily plunge this year for the regional benchmark Stoxx 600 on Tuesday. The continent’s fragile recovery was called into question earlier this week by a European Central Bank survey which indicated that banks were tightening credit conditions.
Helping to push up the Stoxx 600 Index 0.7% on Wednesday was optimism about corporate earnings, which outstripped concerns about the spread of new coronavirus variants.
Optimistic results from semiconductor equipment maker ASML, which raised its sales guidance for the year, and Dutch brewer Heineken, which reported better-than-expected quarterly sales, also boosted sentiment.
In London, the FTSE 100 closed 0.5% higher, after slipping 2% on Tuesday, while Frankfurt’s Xetra Dax climbed 0.4%.
Investors should remain cautious of European stock markets after the Stoxx hit a record high last week, said Shaniel Ramjee, senior investment manager in Pictet’s multi-asset team. “Signals that the market was overbought flashed red.”
The region’s largest exporters stand to benefit from the strong economic recovery underway in the United States and easy access to cheap international finance, Ramjee said, but “in other parts of the market there is too much optimism ”as the European slowness of Covid- 19 vaccinations and new variants meant that“ the economy of face-to-face services could lag behind, especially if Europe misses a summer reopening ”.
US government bonds remained stable, with the benchmark 10-year Treasury bill yielding stable at 1.56 percent.
The dollar, measured against a basket of currencies, slipped 0.1% to hover around its lowest point since early March. The euro was also little budged against the greenback at $ 1.20 ahead of the ECB’s last monthly meeting on Thursday.