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Manufacturing, vaccine data power stocks higher; U.S. dollar dips

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07/01/2020 | 02:48pm EDT
The spread of the coronavirus disease (COVID-19) in New York

By Rodrigo Campos

Stocks across the globe rose on Wednesday following data pointing to a recovery in manufacturing and on bets for a COVID-19 vaccine, while the risk-on mood pushed the U.S. dollar lower.

Germany's manufacturing sector contracted at a slower pace in June, while activity in the United States hit a 14-month high. French factory activity rebounded into growth, and activity in China's factories offered further signs that the world's second-largest economy may have passed the worst of the devastation caused by the pandemic.

On Thursday, the market's focus will be on the U.S. non-farm payrolls report for June.

Pfizer shares jumped 3% after a COVID-19 vaccine developed jointly with Germany's BioNTech was found to be well tolerated, the fourth early-stage drug to show promise in human testing.

The news comes as a Reuters analysis showed coronavirus cases more than doubled in 14 U.S. states last month and fears are growing that the case-load could prompt fresh lockdowns.

"Pfizer news was certainly an impetus for the market to move even higher but in general it is this very positive momentum, looking beyond this re-spreading of the virus, looking beyond that to eventual treatments, eventual vaccine and eventual safe openings of the economy," said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

The Dow Jones Industrial Average fell 77.91 points, or 0.3%, to close at 25,734.97, the S&P 500 gained 15.57 points, or 0.50%, to 3,115.86 and the Nasdaq Composite added 95.86 points, or 0.95%, to 10,154.63.

The pan-European STOXX 600 index rose 0.24% and MSCI's gauge of stocks across the globe gained 0.45%.

For a graphic on World financial markets in 2020:

Emerging market stocks rose 0.60%, while Japan's Nikkei futures lost 0.45%.

Overnight, MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.43% higher.

The stronger data and vaccine news weighed on the dollar, which has been bid on days when traders have been less risky.

"There's definitely a risk-on tone to the market, which continues to bet on the fact that we're past the worst point of COVID. But I think the jury is still out on that judgment," said Boris Schlossberg, managing director at BK Asset Management in New York.

"There's a significant risk of reclosing some of the states. There's still a lot of risk-off flows, and the dollar could be the beneficiary of those flows," he added.

The dollar index fell 0.256%, with the euro up 0.18% to $1.1251. The Japanese yen strengthened 0.45% versus the greenback at 107.46 per dollar, while Sterling was last trading at $1.2477, up 0.63% on the day.

The global rise in manufacturing activity put a bid under energy prices, also supported by a bigger-than-expected drop in U.S. crude inventories.

"Largely we are moving forward in the way of demand and not backward, despite the negative view of coronavirus cases rising," said Tony Headrick, energy markets analyst at CHS Hedging.

U.S. crude recently rose 1.2% to $39.74 per barrel and Brent was at $41.93, up 1.6% on the day.

Treasury yields also rose with the risk-on sentiment.

Benchmark 10-year notes last fell 8/32 in price to yield 0.6774%, from 0.653% late on Tuesday.

The 30-year bond last fell 11/32 in price to yield 1.4245%, from 1.411%.

Gold prices rose to their highest in nearly 8 years at $1,788.96 an ounce, and recently dropped 0.6% to $1,770.57 an ounce. [GOL/]

(Reporting by Rodrigo Campos; Additional reporting by Tom Arnold in London, Stephanie Kelly, Chuck Mikolajczak and Gertrude Chavez-Dreyfuss in New York, Lucia Mutikani in Washington; Editing by Diane Craft and Dan Grebler)

Stocks mentioned in the article
ChangeLast1st jan.
BIONTECH SE 7.24% 70.36 Delayed Quote.107.67%
DJ INDUSTRIAL 1.44% 26075.3 Delayed Quote.-8.63%
EURO / US DOLLAR (EUR/USD) 0.18% 1.13264 Delayed Quote.0.75%
GOLD 0.45% 1808.4 Delayed Quote.18.53%
LONDON BRENT OIL -1.16% 42.331058 Delayed Quote.-35.04%
NASDAQ 100 0.76% 10836.333146 Delayed Quote.24.08%
NASDAQ COMP. 0.66% 10617.443394 Delayed Quote.18.33%
NIKKEI 225 2.22% 22784.74 Real-time Quote.-5.77%
PFIZER LIMITED -0.76% 4090.15 End-of-day quote.-3.17%
PFIZER, INC. 1.11% 33.83 Delayed Quote.-13.65%
S&P 500 1.05% 3185.04 Delayed Quote.-1.42%
STOXX EUROPE 600 0.56% 368.96 Delayed Quote.-11.79%
STOXX EUROPE 600 NR 0.56% 808.51 Delayed Quote.-10.43%
WTI -0.66% 39.875 Delayed Quote.-35.40%
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