Stocks and oil rally even as Delta variant fears persist By Reuters

By Elizabeth Howcroft

LONDON (Reuters) – European stocks opened higher and risk appetite in global markets rose on Monday, but concerns over the COVID-19 Delta variant hampering economic growth persisted as investors assessed the timing possible reduction in monetary stimulus.

After worries about slowing growth pushed stocks and oil prices down last week, they picked up in Asian trading.

The MSCI World Stock Index, which tracks stocks from 50 countries, rose 0.4% at 8:03 a.m. GMT, recovering from its biggest weekly decline since June last week. Europe was up 0.3%.

Oil prices rose, breaking their seven-day losing streak. U.S. West Texas Intermediate crude rose 2.1%, and US West Texas Intermediate crude rose 2%, after the two marked their biggest week of losses in more than nine months last week as markets braced for demand for fuel weakened due to an increase in viral infections.

In currencies, it was 92.264, down 0.2% on the day, from its nine-month high of 92.734 on Friday.

Chart: USD: https://fingfx.thomsonreuters.com/gfx/mkt/nmovaxwwdpa/USD.png

“Following the corrections we’ve seen over the past week, it’s really a rebound,” said Marco Willner, head of investment strategy at NNIP.

“People are watching Jackson Hole, people are also looking at the Delta variant, so the factors haven’t changed – it’s a technical rebound.”

The spread of the Delta variant has the potential to upend the timing of the U.S. Federal Reserve’s plans to scale back its bond buying program.

Dallas Federal Reserve Chairman Robert Kaplan, among the US central bank’s strongest supporters for starting to cut back support for the economy, said on Friday he may have to adjust that view if the Delta variant of the coronavirus significantly slowed economic growth.

Markets will be paying attention to Fed Chairman Jerome Powell’s speech in Jackson Hole this week, although investors looking for clear guidance on tapering may be disappointed.

“One of the key questions will be when the tapering starts. I think it’s not a done deal that Powell will comment on this this week – he could wait until September, maybe even until. ‘in November, () make a big announcement around this one,’ NNIP’s Willner said.

Activity in Germany’s manufacturing and service sectors increased in August, according to PMI surveys, although the pace of growth declined slightly.

Germany’s benchmark 10-year yield was at -0.472%, while the US 10-year yield was at 1.2717%, having lacked direction over the past week.

Expectations that the US Fed will ease monetary stimulus sooner than the European Central Bank have helped the dollar strengthen against the euro in recent weeks, with the euro hitting a nine-month low at 1.1664 $ Friday. It was up 0.2% to $ 1.1724 by 8:09 am GMT on Monday.

Elsewhere, bitcoin broke above $ 50,000 during trading hours in Asia and rose 1.7% on the day to around $ 50,154. The cryptocurrency hit an all-time high of 64,895.22 in April, fell sharply in May, and has gradually recovered since mid-July.

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