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Monday, December 6, 2021

The global fight against stocks is close to record highs; Europe in focus

LONDON. Concerns over a slowdown in growth in China and a spike in COVID-19 cases in Europe blocked the rise in global stock markets on Friday, as stocks struggled to hold on to recent record highs and the euro is facing losses for a second straight week.

While US stocks closed at record highs on Thursday, boosted by the consumer and tech sectors, optimism faded markedly in the Asian session, when the regional index fell 1 percent over the week.

European stocks rose in early London trading on Friday, although sentiment was more cautious as the European stock market volatility indicator hovered around two-week highs.

“Markets are consolidating after skyrocketing dollar and primary bond yields in recent weeks and investors will be looking at preliminary PMI data next week,” said Kenneth Bru, currency strategist at Societe Generale in London.

“In the case of the eurozone, instead of inflation, we are going to pay a little more attention to whether the new Covid restrictions are already having an impact on service activities.”

Data, often seen in recent weeks, shows that economic activity is at a low level as inflation has surged, although the slowdown in economic activity in Europe is greater than in the United States, with COVID-19 affecting sentiment on the rise.

Europe is once again at the center of a pandemic, prompting several countries, including Germany and Austria, to re-impose restrictions ahead of Christmas and sparking controversy over whether vaccines alone are enough to tame COVID-19.

Daily new cases are currently higher than those in the United States, catching up quickly with the UK and close to those in Eastern Europe, Capital Economics reported.

On the broadest record, MSCI, global stocks held less than 0.5 percent below their record highs earlier this month, although Asia Pacific stocks appear to be down 1 percent per week.

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A foreign exchange trader watches monitors in the foreign exchange trading floor of KEB Hana Bank’s headquarters in Seoul, South Korea, November 19, 2021 (Ahn Yeon-joon / AP Photo)

Hong Kong shares fell more than 1 percent on a weighted Alibaba index after a Chinese e-commerce firm plunged more than 10 percent as its second quarter results fell short of expectations due to slowing consumption, increased competition and austerity. from the regulatory authorities.

Alibaba’s data comes after the recent sharp slowdown in retail data growth in China, prompting fears of a broader slowdown in the recovery of the world’s second largest economy.

Sentiment in foreign exchange markets was grim, with the dollar holding up against its major peers, rallying 0.3 percent on the day, while the euro held near six-year lows against the Swiss franc.

The single currency found itself in a quandary this week after policymakers changed market expectations: the European Central Bank will raise interest rates to curb rising inflation. The euro is down more than 1 percent against the US dollar this week, the second straight fall in a week.

US Treasury yields are consistently below 1.60% and investors are awaiting news of the next statement from the head of the Federal Reserve, due out in the coming days.

The Turkish lira remained near Thursday’s record low. The lira weakened about 6 percent after the central bank, under pressure from President Tayyip Erdogan, cut rates again to raise the benchmark to 15 percent, even as inflation approaches 20 percent.

Oil prices have maintained their recent volatility. US oil rose 0.96 percent to $ 79.77 a barrel. Brent crude rose 0.97 percent to $ 82.03 a barrel.

Elsewhere, Bitcoin is approaching its worst week in six months – 20 percent below recent all-time highs. This is despite the fact that crypto miners are raising funds and monitoring public listings.

Posted by Saykat Chatterjee

Reuters

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