By Wayne Cole
SYDNEY (Reuters) – Asian stock markets were in a bad mood on Friday after a volatile week in which sentiment about global growth rose and fell with each new stock on the Delta variant.
A July factory run is expected to show only a slight slowdown in activity in Europe and the United States from very high levels, but Asia appears more vulnerable.
“Faced with headwinds from the Delta variant of the COVID-19 virus, global economic expansion is advancing, albeit more timidly than a month ago,” said Sara Johnson, executive director of global economy at IHS Markit .
“The outlook in advanced countries with high vaccination rates remains good, but the short-term outlook in emerging and developing countries with low vaccination rates is bleaker. “
This divergent outlook was reflected in the MSCI’s largest Asia-Pacific equity index outside of Japan which slipped 0.6%, leaving it down 1.4% on the week to here.
was closed for a vacation, but down 1.7% for the week and to a mustache from a seven-month low.
Chinese blue chips fell 1.2%, while remaining well within their tight trading range of the past three weeks.
Wall Street was in a better mood after a string of strong earnings, with Nasdaq futures up 0.3% and 0.2%. EUROSTOXX 50 futures also strengthened 0.2%, while futures gained 0.3%.
Investors are now anxiously awaiting the Federal Reserve’s policy meeting next week where more talk of the cut is expected, although President Jerome Powell has repeatedly said the labor market remains well below the market. objective.
He also argues that the recent spike in inflation will be short-lived, which may be one of the reasons bond markets have rallied so strongly. US 10-year bond yields were last at 1.28%, after hitting a five-month low of 1.128% earlier in the week. [US/]
German 10-year bonds performed even better, with yields falling seven basis points so far this week to -0.42%, the lowest since mid-February.
The rally was helped by a dovish trend from the European Central Bank overnight when it pledged not to hike rates until inflation hit its 2% target.
“Currently, the ECB forecasts inflation at 1.4% in 2023, and it anticipates a very gradual recovery towards the target thereafter,” noted analysts at ANZ.
“The guidance implies that the ECB will not get dragged into future global tightening cycles unless justified by eurozone dynamics. Politics places the ECB on the conciliatory end of the World Central Bank’s hawkometer. “
This outlook contributed to the euro’s steady decline to 1.1771, near the four-month low of $ 1.1750 hit earlier in the week. This brought the highest since early March, and it was last at 92.818.
The euro also struggled against the safe haven Japanese yen and hit its lowest level in four months this week before stabilizing at 129.68 yen. With all of the euro action, the dollar was relatively more stable against the yen at 110.24.
In the commodities markets, gold dipped to $ 1,802 an ounce and was 0.4% easier on the week. Base metals fared much better as high demand meets tight supply.
Oil prices have also been supported by speculation, demand will exceed supply in the coming months, even after OPEC + agreed to increase production.
lost 27 cents to $ 73.52 a barrel, after surging overnight, while it lost 25 cents to $ 71.66 a barrel.