Stocks rallied after the spread of the Delta variant caused a rout.


Stocks rose on Tuesday, Wall Street’s worst day in months.

The increasing number of coronavirus cases, fueled by the Delta variant, got on the nerves of investors on Monday and created a surge in financial markets. The rapid spread of the virus and the uncertain course of monetary policy were a reminder that the economic recovery from the pandemic remains rocky.

“Markets are clearly reassessing the risks posed by the new variant,” said Hugh Gimber, strategist at JPMorgan Asset Management in London. “Nothing has changed in the data, current vaccines still seem very effective at preventing serious diseases, but optimism about how smoothly and how quickly the global economy can reopen has faded this week.”

The S&P 500 rose more than 1 percent on Tuesday, a day after the benchmark fell 1.6 percent in its sharpest drop since mid-May.

Government bond trading was volatile and fell sharply before yields on 10-year U.S. Treasury bonds returned to about 1.20 percent. On Monday, the yield fell 10 basis points to 1.19 percent, its lowest point since February.

Mr Gimbler added that stocks are currently taking cues from the bond market, adding that he expects bond yields to rise again. “Ultimately, a 10-year Treasury yield of 1.2 percent or less is not consistent with the strength of the global economy today,” he said.

The Stoxx Europe 600, which fell 2.3 percent on Monday – its worst day this year – rose nearly 0.7 percent. Asian markets closed lower on Tuesday after the previous day’s slide on Wall Street.

The British pound fell 0.5 percent against the US dollar to its lowest level since January. On Monday, the government removed most of its loans. coronavirus restrictions in the UK however, he still urged caution as the country has reported nearly 40,000 new cases. That same day, the State Department and Centers for Disease Control and Prevention in the US told Americans to avoid traveling to the UK.

Mr Gimbler said the UK was “a test case to challenge the thesis that a widely vaccinated population could be reopened without restriction”. Therefore, traders will pay close attention to what is happening there.

“While bargain hunters will be swirling around, concerns are still swirling in the markets as concerns have risen that high infection rates will lead to a new economic slowdown,” Hargreaves Lansdown analyst Susannah Streeter said in a note. .


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