US stocks followed European equity markets higher amid a broad-based rebound as China took steps to bolster its economic recovery, while Treasuries retreated after an eight-day rally fuelled by concerns about global growth amid the spread of Covid-19 variants.
The S& P 500 and Dow Jones rose, while the Nasdaq 100 was little changed after President Joe Biden took aim at tech companies by encouraging regulators to promote more competition.
The Stoxx Europe 600 index advanced, with all sectors in the green.Earlier today, UK airlines such as British Airways-owner IAG, easyJet and Ryanair rose between 1.5 per cent and 2 per cent as Britain planned scrapping quarantine for fully-vaccinated arrivals from other countries in the coming weeks.
British luxury goods group Burberry rose 3.3 per cent after Goldman Sachs upgraded the stock to "buy", while Italian rival Salvatore Ferragamo slipped 0.7 per cent after the US bank downgraded it to "sell".
Markets have been roiled this week as a rise in cases of the Delta coronavirus variant crimped risk appetite and led to a flight to safety, with some betting the post-pandemic reflation trade had stalled and secular stagnation was back on the agenda.
“There seems to be the gradual realisation for many that the vaccination programmes alone won’t prove enough to get economies back to their pre-Covid normality, with cases at the global level now ticking up again as the more infectious Delta variant spreads across the world,” said Deutsche Bank analyst Jim Reid.
Weighed against that is the still ultra-easy monetary policy from many major central banks, although some fear this could yet be curtailed if inflation picks up and policymaker largesse is reined in.
“Swings in sentiment and positioning may prove to be powerful in both directions. But ultimately, the data will be key,” said Mark Dowding, chief investment officer at BlueBay Asset Management.China’s central bank cut the amount of cash most banks must hold in reserve, while the European Central Bank on Thursday indicated it will tolerate an inflation overshoot, implying an even longer period of loose policy.
Meanwhile, tension between the US and China continues to bubble. Washington will add at least 10 Chinese entities to its economic blacklist as early as Friday over alleged human rights abuses and high-tech surveillance in Xinjiang, according to a report. – Bloomberg, Reuters
