NEW YORK, Jan 13 — Global stocks were mixed yesterday as hopes for coronavirus vaccinations and US fiscal stimulus competed with fears over surging infections, tougher lockdowns and political turmoil in the United States.
The dollar was mostly lower against other major currencies, while oil prices rose.
Wall Street stocks finished a choppy session modestly higher, with equities tied to the US economic recovery leading.
Petroleum-linked shares were winners, along with airlines, retailers and infrastructure as investors anticipate gains for beaten-down sectors that have suffered during Covid-19. President-elect Joe Biden is expected to announce more details on a big economic support package later this week.
“I do believe there’s going to be a pretty strong recovery driven by stimulus infrastructure spending, now that you have a Democrat controlled government,” said Shawn Cruz of TD Ameritrade. “It will make it easier to get some of those probably larger stimulus bills through.”
European equities pulled back as the Netherlands prolonged coronavirus restrictions until February 9, while Spain extended for another two weeks a ban on people entering from the UK by air or sea because of concerns over the new strain of the coronavirus detected there.
“The fact that vaccines are being rolled out will be comforting for investors but the first quarter is shaping up to be far more painful than anticipated,” said Craig Erlam, analyst at Oanda trading group.
“This may dampen sentiment in the coming weeks, especially if corporate America raises concerns during fourth-quarter earnings season, which kicks off later this week.”
Another focus of attention for traders was Washington, where Democrats are seeking a historic second impeachment of outgoing president Donald Trump after he incited an attack on the Capitol that left five people dead.
There is concern however that the move could distract from the Democrats’ plans for a bigger stimulus bill to soften the virus’s impact, and some warn the row could overshadow Biden’s first months in office.
Bets on another rescue deal have ramped up inflation expectations, with 10-year Treasury yields above one per cent for the first time since March and talk swirling that the US Federal Reserve could begin to consider winding down its vast bond-buying scheme.
A higher yield “points to higher inflation down the road — which is negative for stocks,” Lynx Equity Strategies said in a client note. “We are not there yet, but as the 10-year inches higher — the closer we get.” — AFP