Signs of Market Angst Growing as Investors Turn to Havens

Eric Lam
·3 min read

(Bloomberg) -- Once-bullish global risk sentiment is starting to cede ground to pockets of angst.

Surging commodity prices and rising inflation expectations have given way to rallies in havens from Treasuries to the Japanese yen this week, while pockets of the tech world are in crisis. Investors are once again questioning the strength of the global recovery and mulling the threat of new Covid-19 variants and prospective central bank tightening -- in particular by the Federal Reserve.

“The balance of risks is slightly more negative given the continued global reach of the delta variant and the reaction to the FOMC,” said Deutsche Bank AG economist David Folkerts-Landau in a report Tuesday. “One of the biggest questions soon will be the extent to which governments and citizens are prepared to live with the virus. That answer will have crucial implications for the shape of the recovery and the new steady-state we’re heading to.”

Benchmark 10-year Treasury yields slumped Tuesday to touch their lowest since February after a key gauge of service-sector activity fell more than expected, raising concern over the strength of the U.S. economic rebound. Brent crude futures, which hit their highest since 2018 after OPEC+ talks over production increases collapsed earlier this week, reversed course to give up this month’s gains.

With the world’s central bankers taking a data-dependent approach, global investors are parsing every economic release for clues as to how it might affect their thinking. While Tuesday’s U.S. services data showed record order backlogs, traders focused instead on its weaker employment measure and a slight decline in prices paid, which suggested an acceleration in cost pressures may be starting to cool.

U.S. stocks snapped a streak of seven consecutive closing record highs, led lower by economically-sensitive energy and financial shares. Traditional haven the Japanese yen strengthened, pushing the currency to near a one-week high against the dollar.

Also spooking traders this week was the ongoing spread of the delta variant of the coronavirus, even in countries like Israel which has one of the world’s most effective inoculation drives. Many new Covid-19 cases are among vaccinated people, according to Ynet news service, while a report showed Pfizer Inc.’s vaccine was less effective at preventing the virus, even though it continued to provide a strong shield against severe illness.

Pfizer Shot Halts Severe Illness in Israel as Delta Spreads

Meanwhile, China’s technology stocks are withering under increasing regulatory scrutiny as investors brace for a new era of tighter oversight from Beijing. An index of the country’s internet shares has fallen to the lowest since October.

Still, the angst in pockets of the financial market has yet to lead to broader weakness. A gauge of global stocks is trading just off an all-time closing high set Friday and benchmark yields remain up more than 40 basis points this year.

Investor focus now turns to the release of Federal Reserve meeting minutes Wednesday that should bring fresh insight on U.S. monetary policy.

More stories like this are available on bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2021 Bloomberg L.P.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting

Recommended Stories

  • U.S. service sector activity cools in June; employment measure contracts - ISM survey

    U.S. services industry activity grew at a moderate pace in June, likely restrained by labor and raw material shortages, resulting in unfinished work continuing to pile up. The Institute for Supply Management said on Tuesday its non-manufacturing activity index fell to 60.1 last month from 64.0 in May, which was the highest reading in the series' history. A reading above 50 indicates growth in the services sector, which accounts for more than two-thirds of U.S. economic activity.

  • GLOBAL MARKETS-U.S. stocks mixed, bonds yields ease as crude prices slip

    (Additional reporting by Scott Murdoch in Singapore; Editing by Alison Williams, John Stonestreet and Alexander Smith)

  • Euro near 3-month low after soft data, dollar looks to Fed's minutes

    The euro staggered near a three-month low against the dollar on Wednesday after disappointing German data raised doubts about the strength of the economic recovery, while the dollar awaited the Federal Reserve's minutes from its last policy meeting. Elsewhere, cryptocurrencies were in a holding pattern, with bitcoin little changed at $34,066 and ether at $2,308.

  • Microsoft’s ‘JEDI’ Contract Canceled in Big Win for Amazon

    The U.S. Department of Defense has canceled a planned 10-year, $10 billion cloud-computing contract known as JEDI that had been awarded to Microsoft in 2019, while launching plans for a new multivendor project that will likely be split between Microsoft and Amazon.

  • S&P 500 Price Forecast – Stock Markets Pull Back From Highs

    The stock markets have pulled back just a bit during the course of the trading session on Tuesday as traders came back to work from the Independence Day holiday.

  • Stocks stumble as mood shift benefits bonds, dollar

    Asian share markets stumbled on Wednesday as a bout of risk aversion boosted bonds and the dollar, while investors braced for minutes from the Federal Reserve's last meeting which could confirm a hawkish turn in U.S. monetary policy. Dealers were hard pressed to find a single catalyst for the sudden mood swing, but a Chinese crackdown on tech companies clearly had an impact. Hong Kong stocks shed another 0.9% to near six-month lows, while U.S.-listed ride-hailing company Didi Global Inc shed more than 20% in New York.

  • Pentagon hits reset on Trump's $10 billion cloud deal, welcoming new players

    WASHINGTON (Reuters) -The U.S. Defense Department canceled its $10 billion JEDI cloud-computing project on Tuesday, reversing the Trump-era award to Microsoft Corp and announcing a new contract expected to include its rival Amazon.com and possibly other cloud players. Seattle-based Amazon, the biggest cloud computing provider, was widely expected to win the contract.

  • Stock market news live updates: Stocks pull back from record levels to end mixed: Dow drops 209 points, or 0.6%

    Stocks were mixed on Tuesday but held near record levels as traders returned to a relatively sanguine session following a holiday weekend in the U.S.

  • 3 Under the Radar Penny Stocks With Triple-Digit Gains in Sight

    Let’s take a look away from the headline-grabbing market giants, and head into the world of penny stocks. Traditionally, these were stocks priced at just pennies per share – that’s the old English copper penny, when it was 240 pence to the pound – but nowadays the ‘pennies’ are stocks with share prices under $5. The penny stocks offer retail investors a series of advantages, all connected. Their low price makes the cost of entry to the market affordable – a relatively small investment can net a

  • 3 Dividend Stocks That Are Dirt Cheap Right Now

    Descriptions like "income investor" and "value investor" are thrown around as if they're mutually exclusive. There aren't very many stocks that provide solid dividends that are also available at an attractive valuation. Here are three dividend stocks that are dirt cheap right now.

  • Can These 2 Beaten-Down Biotechs Rebound? Cathie Wood Thinks So.

    As biotech investors, we would love our favorite companies to report success with every candidate. The failure of certain investigational products in clinical trials is all part of the biotech business. Not if you follow superstar investor Cathie Wood, the founder of ARK Invest.

  • 3 Value Stocks That'll Make You Richer in the Second Half of 2021 (and Beyond)

    For more than a decade, Wall Street and investors have focused their attention on growth stocks. That's because historically low lending rates and ongoing quantitative easing measures from the nation's central bank made it easy to access cheap capital.

  • This Vanguard ETF Could Make You a Multimillionaire

    Investing in the stock market is one of the best ways to generate wealth. While there are plenty of fantastic stocks and funds to choose from, this one Vanguard exchange-traded fund can limit your risk while putting you on the path to becoming a multimillionaire. The Vanguard Total Stock Market ETF (NYSEMKT: VTI) tracks the stock market as a whole, and it contains 3,791 stocks from a wide variety of industries.

  • 6 Months Into Mass COVID-19 Vaccinations, Here’s How Pfizer and Moderna Are Faring

    Pfizer and Moderna were the first two companies to get emergency approval for COVID-19 vaccinations, which they began distributing in earnest at the beginning of 2021. Although the shots were free of...

  • Is a Single Vanguard Fund Enough to Invest for Retirement?

    Vanguard has made its name by offering low-cost index funds that require little to no ongoing management on the part of the investor. This has helped the investing behemoth accumulate over $7.2 billion in assets under management -- a number steadily growing by the day. On the whole, however, a single fund strategy appears to be completely acceptable for retirement savings.

  • CEO Who Failed in Silicon Valley Spurs 4,500% Stock Gain at Home in Japan

    (Bloomberg) -- Takanori Nakamura pulled out of Silicon Valley in 2015 after his mobile marketing software flopped and decided to focus everything on his home country, Japan.Now those efforts are paying off. His company, Rakus Co., has surged more than 4,800% since going public in Tokyo that year for one of the best performances on the country’s benchmark stock index.Nakamura, who owns 34% of the cloud-based expense software firm and serves as its president and chief executive officer, has seen h

  • 10 Stocks Reddit’s WallStreetBets is Buying in July 2021

    In this article, we discuss the 10 stocks Reddit’s WallStreetBets is buying in July 2021. If you want to skip our detailed analysis of these stocks, go directly to the 5 Stocks Reddit’s WallStreetBets is Buying in July 2021. Reddit forum WallStreetBets, with a user base of more than 10.6 million, has become one of […]

  • 10 Best High Yield Dividend Stocks Under $50

    In this article, we will be looking at the 10 best high yield dividend stocks under $50. To skip our detailed analysis of dividend investing, you can go directly to see the 5 Best High Yield Dividend Stocks Under $50. Dividend investing may be the perfect strategy for those who want multiple income streams. Dividend stocks […]

  • IBM Stock Is Falling. What’s Behind the Downward Move.

    IBM announced on Friday the sudden departure of Red Hat CEO Jim Whitehurst, leading to two days of stock drops. IBM has also had a widespread email outage.

  • Lumber is Down a Whopping 40%, and Still At Historic Highs – An Expert Weighs In

    Lumber has been having quite the moment as of late. The ordinarily quiet commodity market has been the center of attention since a booming housing market and supply strain disruptions lead to an...