Macro Roundup (Aug 25)

SHANGHAI, Aug 25 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar eased further on Tuesday as risk-related currencies benefited from rising commodity prices and markets set aside concerns about the spread of the delta coronavirus variant to gauge data that showed a US economy in strong recovery mode.

Risk appetite in global markets strengthened after the US Food and Drug Administration on Monday granted full approval to the Covid-19 vaccine developed by Pfizer and BioNTech in a move that could accelerate US inoculations.

A bounce in China’s technology sector also contributed to risk-on sentiment that helped boost the Canadian, Australian and New Zealand dollars.

The dollar index, which measures the greenback against a basket of six currencies, fell 0.095% to 92.899.

On Wall Street, stocks were higher Tuesday following a broad-based rally on news that US regulators granted full approval for Pfizer-BioNTech’s Covid vaccine.

The Dow Jones Industrial Average rose 30.55 points, or less than 0.1%, to 35,366.26. The S&P 500 added 0.1% to a new closing high of 4,486.23. The Nasdaq Composite gained 0.5% to 15,019.80, also a new closing high.

Chinese stocks led the Nasdaq as investors have been getting more clarity on China’s regulatory outlook and buying shares of names that have taken a beating lately. Pinduoduo jumped 22.2% while JD.com rose 14.4%, Tencent Music Entertainment climbed 12.7% and Baidu gained 8.6%.

Oil prices rose 3% on Tuesday, extending sharp gains on a bullish demand outlook after US regulators issued their first full approval for a COVID-19 vaccine and Mexico suffered a large production outage due to a fire on an oil platform.

Brent crude oil futures settled 3.35% higher at $71.05 per barrel while US West Texas Intermediate (WTI) gained $1.90, or 2.9%, to settle at $67.54 per barrel.

Last week, both benchmarks notched their biggest weekly losses in more than nine months. On Monday, both jumped more than 5%, boosted by a weaker dollar.

A resurgent pandemic has fueled health system concerns; however, “economically harmful containment measures seem rather unlikely”, said Julius Baer analyst Norbert Rucker, citing the effectiveness of vaccines.

Gold consolidated above $1,800 on Tuesday as some investors bet the recent surge in Covid-19 cases could steer the US Federal Reserve away from announcing at its Jackson Hole symposium that it plans to taper its economic support.

Spot gold was steady at $1,804.99 per ounce by 1:47 p.m. ET, having earlier hit its highest since Aug. 5. US gold futures settled up 0.1% at $1,808.90.

“The tenure of the marketplace has pivoted from thinking the Fed would lean hawkish at Jackson Hole symposium to one of the coronavirus keeping the Fed from doing anything as soon as they might have wanted to, and maybe even this year,” said Jim Wyckoff, senior analyst at Kitco Metals.

Reflecting the economic impact of the virus was data showing US business activity growth slowed in August.

The pan-European Stoxx 600 was a hair below the flatline by the end of trading, with sectors and major bourses pointing in opposite directions.

The US Food and Drug Administration granted full approval for Pfizer and BioNTech’s Covid vaccine Monday.

Focus for global investors this week remains on the Fed’s Jackson Hole symposium, which takes place virtually on Thursday.