Renewed recovery optimism provides further boost to stocks, crude

HONG KONG (AFP/ APP): Equities and oil prices rose again on Tuesday, extending a global rally fuelled by renewed optimism over the recovery outlook after Washington gave full approval to Pfizer-BioNTech’s vaccine and an increase in US Covid infections appeared to be peaking.
A call by China’s central bank for more economic support and a move to keep borrowing costs down also provided some cheer to the region, while investors are keenly awaiting a policy speech later in the week by Federal Reserve boss Jerome Powell.
Markets have enjoyed a strong start to the week, further helped by bargain-hunting following a recent sell-off caused by worries including the fast-spreading Delta variant and expectations the Fed will soon begin tapering financial support.
New York’s three main indexes shot higher Monday — with the Nasdaq hitting a new record — as traders cheered news that the Food and Drug Administration had fully approved the Pfizer-BioNTech shot, which is expected to help push up vaccinations.
Around 52 percent of the population has been double jabbed but the rate has slowed owing to hesitancy among many people.
The FDA move “now paves the way for many companies and government agencies to enforce vaccine mandates”, said OANDA’s Edward Moya, adding that making them mandatory “could move the needle here in getting the US closer to herd immunity”.
Analysts said data suggesting that a recent spike in infections in the United States was tailing off was also lifting spirits as figures dropped in the original hotspots and new cases slowed in Florida and Louisiana.
China’s apparent success in taming a worrying flare-up in the world’s number two economy also lifted the mood on trading floors.
The positive news lifted optimism over the global recovery, which had taken a knock this month as some governments were forced to reimpose lockdowns or other containment measures.
Hong Kong led gains Tuesday, jumping more than two percent with under-pressure tech giants Tencent and Alibaba each up more than seven percent as investors pick up bargains following a recent rout fuelled by China’s regulatory crackdown.
Ecommerce staple powered more than 10 percent higher after a forecast-beating earnings report showed its resilience to Beijing’s latest moves.
Shanghai, Seoul and Manila added more than one percent, while there were also healthy advances in Tokyo, Sydney, Singapore, Wellington, Taipei, Mumbai and Bangkok.
London, Paris and Frankfurt rose at the open.
The rally was mirrored in oil markets, where both main contracts extended the previous day’s surge of more than five percent, which marked the best daily performance in nine months as recovery hopes lifted demand expectations.
The commodity, like equities, had been suffering hefty losses in August owing to worries about the Delta spread, but observers forecast prices will get back on track.
“The crude demand outlook will get a boost… now that the Delta variant appears to be peaking in the South and as China lowers local Covid cases to zero,” Moya added.
West Texas Intermediate “should be supported going forward as the selloff was overdone and as stockpiles continue to shrink”.
Investors are now fixated on Powell’s speech to central bankers and finance chiefs this week in Jackson Hole, Wyoming, hoping for some guidance on monetary policy as speculation swirls that the Fed is planning to taper its bond-buying programme by year’s end.
The issue has been a key driver of market sentiment for much of this year, with hawks calling for an earlier tightening to prevent an economic overheating and doves calling for patience to allow the recovery to take hold.
However, the impact of Delta on the growth outlook has muddied the waters and led to questions about whether any action now would be wise.
“The feeling is Fed chair Jay Powell will err on the side of caution at this week’s Jackson Hole symposium and fail to offer advance notice of tapering its asset purchase programme,” Chris Weston at Pepperstone Financial Pty said.
Dallas Fed chief Robert Kaplan gave markets a lift when he said last week that Delta could lead him to rethink his calls for an early taper.