Stocks gain, the US dollar falls; The Fed is less inclined to cut back
NEW YORK, Aug.23 (Reuters) – Global equity markets rose as the US dollar fell on Monday as investors were less concerned that the Federal Reserve would soon begin to change its accommodative monetary policy.
Market sentiment was boosted after the U.S. Food and Drug Administration fully approved the Pfizer Inc (PFE.N) / BioNTech SE COVID-19 vaccine. New cases, driven by the highly infectious Delta variant, have increased in parts of the United States with lower vaccination levels. L4N2PU36O
The dollar index slipped. Last week it hit a nine-month high on bets the Fed would start to move away from its accommodative monetary policy, but that view began to change on Friday when Dallas Fed Chairman Robert Kaplan , said he could reconsider his hawkish stance if the virus harms the economy. Read more
Now, investors are less confident that Fed Chairman Jerome Powell’s speech in Jackson Hole this week will indicate a timeline for the liquidation of the Fed’s bond buying program.
The dollar index, which measures the currency’s performance against a basket of six major currencies, fell 0.516% to 92.999.
“There was a fear that they would announce a cut at Jackson Hole and start in September. But now it looks like it will be in 2022,” said Thomas Hayes, managing member of Great Hill Capital.
The MSCI Global Equity Index (.MIWD00000PUS), which tracks the stocks of 50 countries, rose 1.09%. Last week it saw its biggest weekly drop since June. The European STOXX 600 closed 0.66% higher (.STOXX).
The US FDA, which gave the emergency use clearance for the two-dose Pfizer / BioNTech vaccine in December, has gone further based on updated data and fully approved it for people 16 years of age. years and older. The Pentagon then said it was preparing to make the vaccine mandatory for US military personnel. U.S. health officials now expect more vaccination mandates from state and local governments, as well as private employers.
On Wall Street, the Dow Jones Industrial Average (.DJI) rose 0.61%, to 35,335.71, the S&P 500 (.SPX) gained 0.85%, to 4,479.53 and the Nasdaq Composite ( .IXIC) added 1.55%, to 14,942.65.
Overnight in Asia, the largest MSCI Asia-Pacific stock index outside of Japan (.MIAPJ0000PUS) closed up 1.46%, while Japan’s Nikkei (.N225) rose by 1.78%.
“It’s a whole combination of factors, the most important being the FDA’s approval of the vaccine. A lot of people take it as good news and the Fed may not be as enthusiastic as we suspect.” said Michael Ashley Schulman, chief investment officer at Running Point Capital.
Oil prices rose more than 5% after seven days of decline.
Brent crude rose $ 3.57, or 5.5%, to $ 68.75 a barrel after hitting its lowest level since May 21 at $ 64.60 during the session. U.S. West Texas Intermediate (WTI) crude for October delivery rose $ 3.50, or 5.6%, to $ 65.64.
Last week, both crude benchmarks marked their biggest weekly declines in more than nine months, with Brent slipping around 8% and WTI slipping around 9%. Read more
Gold climbed above the key psychological level of $ 1,800, boosted by the weaker dollar.
Spot gold rose 1.32% to $ 1,804.3958 an ounce, after hitting its highest level since August 5.
Report by Chibuike Oguh in New York; Editing by Dan Grebler and David Gregorio
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