FirstFT: Global markets shaken by fears over Delta variant
Global stock markets suffered their worst day in months yesterday as the resurgence of the Covid-19 Delta variant forced a rethinking of growth prospects.
In England, yesterday’s so-called Freedom Day was overshadowed by a humiliating turnaround for Prime Minister Boris Johnson who was forced into self-isolation after coming into contact with his health minister who contracted the virus.
Infection rates are also rising in the United States just as the vaccination campaign loses momentum, increasing the risk that further restrictions will be needed to prevent health services from being overwhelmed.
Securities sensitive to the economic recovery were the hardest hit. Airlines, transport companies, stocks of materials and chemicals all suffered heavy losses, as did small and medium-sized businesses. Shares of US banks, which lend more as the economy grows, fell 14% from their peak in June.
Meanwhile, there has been a surge in demand for put options, which protect investors from falling stock prices. Safer bets like Treasuries have seen prices rise and yields fall. The yield on the benchmark 10-year Treasury bond fell below 1.2 percent yesterday, the lowest level since February.
“Monday was ugly,” writes Rob Armstrong in today’s Unhedged email. It reviews the key themes of the sell-off and what it tells us about the outlook for the rest of the summer in financial markets.
This is the view of Mike Lewis, head of US equity spot trading at Barclays:
“It is clear that investors believe the recovery may take a little longer and reopening trade may not be as appealing.”
After yesterday’s downturn, today looks more promising. Stocks are up in Europe despite a massive selloff in Asia overnight. US futures also point to a slightly higher open.
Five other articles in the news
1. China responds to accusations of US cyberattacks China has challenged US accusations that Beijing was at the heart of a wave of global cyberattacks, including an offensive against a Microsoft messaging app that has affected tens of thousands of organizations. The White House and its Western allies yesterday accused the Chinese government of partnering with criminal gangs to carry out large-scale cyber attacks.
2. Leon Black rejects allegations that he raped a Russian model Lawyers for the billionaire founder of Apollo Global Management yesterday strongly rejected allegations that he raped and harassed a young Russian model, calling Guzel Ganieva a “fabulist” and his trial “a work of fiction”.
3. Biden will not back down on the climate plan Joe Biden will not give up on putting climate change at the heart of his legislative agenda, his senior environment official said. Michael Regan, the head of the Environmental Protection Agency, told the Financial Times he believes the US president will not let his climate agenda be derailed by some of the moderate Democrats in Congress.
4. Robinhood seeks to value up to $ 35 billion when it goes public Online brokerage firm Robinhood is seeking a valuation of up to $ 35 billion when it goes public, one of the most anticipated stock quotes of the year. Robinhood is offering around 55 million Class A common stock between $ 38 and $ 42 as it seeks to raise more than $ 2.3 billion, the company said in a filing.
5. Pedro Castillo finally confirmed as the next president of Peru The leftist candidate was finally confirmed as Peru’s next president, more than six weeks after a second ballot. After one of the longest and fiercest electoral battles in the country’s history, the national electoral jury confirmed Castillo’s victory last night in a televised address.
Haiti last Claude Joseph, the interim president of Haiti who took office after the assassination of Jovenel Moïse earlier this month, agreed to step down under diplomatic pressure and cede power to a rival.
from China The commitment to reach zero cases of Covid-19 means that most of its citizens will likely be cut off from the outside world until the end of the year or even mid-2022, analysts say.
The United States Centers for Disease Control and Prevention yesterday urged Americans to avoid traveling to UK.
Canada will begin allowing fully vaccinated U.S. tourists from early August and vaccinated travelers from other destinations in September.
The day to come
Out of this world Jeff Bezos will take off from the West Texas desert today aboard the Blue Origin rocket for a journey to the far reaches of space. The Amazon founder will fly with his younger brother Mark, 82-year-old aviator Wally Funk and 18-year-old Dutch student Oliver Daemen.
Earnings Streaming giant Netflix is releasing its second quarter results today. Note also that Philip Morris International, which recently bought the British group of inhalers Vectura, Chipotle and the oil services group Halliburton.
Hearing on cybersecurity The US Energy and Trade Subcommittee meets to examine the threat of ransomware.
Brussels warning The European Commission must warn of growing threats to judicial independence and the fight against official corruption in Hungary and Poland.
What else do we read
“There are possibilities everywhere” A profound change is underway in the American labor market. U.S. employers have historically been able to dictate terms to their workers, but now companies are desperate to hire staff as lingering fears over the pandemic, lack of child care, and a temporary extension of unemployment benefits have kept them going. many workers on the sidelines. Job seekers have more bargaining power with potential employers than they have in decades.
Two big reasons to doubt the global boom While economists expect the global economy to reopen dramatically, there are two reasons to question its strength and duration: China and the United States. The superpowers are the engines of growth, but cracks are appearing in their economic engines, writes Ruchir Sharma.
China is still far from being a superpower If China is unable to achieve a global military presence that rivals the United States, it may have to find a new way to be a superpower, argues Gideon Rachman. Historically, wars have tended to be the means by which new superpowers emerge and remake the world order, he says.
The pandemic brings transformation for the packaging industry The explosive growth in shipments during the pandemic has alerted investors to unglamorous deals from cardboard boxes, a $ 350 billion paper-based packaging industry at the heart of the e-commerce economy.
Why Gabon wants markets to help fight climate change As oil reserves dwindle, Gabon seeks to reposition itself as a “green superpower”. The rare high-income country in Africa wants to be recognized for the preservation of its tropical forests, the most important forest ecosystem on the planet after the Amazon. So how does she plan to gain “natural capital”?
When it comes to summer suits, crumpled is the word Like so many things, the summer suit reinvents itself as a separate piece, a revisited seersucker, finally learning to love the crinkle of linen and, if in doubt, paired with sneakers. Nicholas Foulkes explains how men are embracing the post-containment art of dressing casual.