Global stocks rise in wake of US markets' rally, as oil recoups most of its losses
- Global stocks tracked US equities higher Tuesday as optimism about COVID-19 and the Federal Reserve took hold.
- Investors' hopes were lifted by the FDA's approval of Pfizer's vaccine, seen as likely to boost vaccinations and economic recovery.
- Oil prices rose to recoup almost all of last week's losses as the dollar weakened as Fed fears eased.
US stock futures rose Tuesday as optimism returned to
Investors took hope from the FDA's first official approval of Pfizer's COVID-19 vaccine, seen as likely to accelerate the pace of vaccinations and so the economic recovery. Cases of the Delta variant have started to plateau globally after growing for nine consecutive weeks.
Futures linked to the S&P 500 were up 0.16%, Dow Jones futures gained 0.12% and Nasdaq futures added 0.31% at 6:13 a.m. ET on Tuesday. In the regular session Monday, the tech-heavy Nasdaq 100 and the S&P 500 closed at fresh record highs, while the
Asian equities also made strong gains to follow the US markets bounce, likely due in part to investors buying the dip. But in Europe, stocks were pulling back slightly from small gains made at the open.
Investors appeared to find a silver lining in the manufacturing and services activity data out Monday, even though those preliminary readings for August fell short of expectations in countries around the world. The US flash composite PMI declined to an eight-month low, signaling a loss of momentum in the economic recovery.
"There seemed to be increasing optimism that the weakening outlook might actually lead to a more cautious attitude by central bankers when it comes to withdrawing monetary policy support," Deutsche Bank analysts said in a note.
Markets have been haunted by concerns about when the Federal Reserve and other central banks will wind down their pandemic-era stimulus that has helped lift markets to all-time highs as economies reopened.
Investors are now bracing for the Fed's virtual Jackson Hole meeting, which starts Thursday, and to Fed Chair Jerome Powell's speech Friday that could provide clues to its tapering plans.
At the same time, they are monitoring the situation in Afghanistan, after G7 leaders said they will hold a virtual meeting on the crisis on Tuesday, and as President Biden assesses whether to delay the pullout of US forces beyond the August 31 deadline.
Oil futures extended their recovery, coming close to recouping all of the losses logged last week as COVID-19 optimism took hold. Prices were also boosted by a weaker US dollar, which fell as concerns about a Fed pullback in bond-buying eased.
"Oil prices could quickly rally back to $70 if the Fed does not send the dollar higher by formally committing to tapering its asset purchases," Edward Moya, senior market analyst at Oanda, said in a note.
Asian stocks moved higher as the rise in Covid-19 cases slowed. Also in focus was the People's Bank of China's message that it will improve credit support for small businesses and work to stabilize credit growth.
In Europe, shares fell back after opening with small gains. London's FTSE 100 was down 0.18% after opening higher, while the Euro Stoxx 50 whittled down its rise to 0.04%. Frankfurt's DAX held onto its increase of 0.26%.
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