Investors have for the moment reverted to the glass half-full mentality.
Buying interest in big tech is propelling the Nasdaq to a record closing high
Sentiment was also buoyed by the US Food and Drug Administration granting full approval for the Pfizer/BioNTech Covid-19 vaccine, prompting hopes that the level of inoculations could be accelerated as a result. The Delta variant has become a drag on economic recovery generally and measures to mitigate its impact will have positive effects.
Indeed, a third monthly drop in business activity in the US showed the effects which the variant is having, although more positive news came in the form of a rise in home sales. Economic data continues to be mixed, potentially lessening the pressure on the Federal Reserve to instigate its tapering plan, with no overheating in evidence. The Jackson Hole symposium remains the next focus of attention for further colour.
The reversion to a risk-on approach from investors nudged the major indices higher and in the year to date the Dow Jones has now added 15.5%, the S&P500 19.3% and the Nasdaq 15.9%.
The generally improved sentiment on the economic outlook was positive for the recently beleaguered oil price, and commodities in general.
This fed through to a positive showing from the FTSE100, although the more domestically focused FTSE250 dipped slightly on some ongoing pressure for the UK economy. Investors will be looking out for signs that blockages in the supply chain are being cleared and that the current levels of labour shortages can be reversed, neither of which are currently in evidence.
Despite a positive showing from Asian markets overnight, stocks exposed to the region remain under pressure, with the likes of Burberry slipping slightly once more and now down by 11% over the last month. More positively, cyclical stocks including commodities are among the early risers within the premier index.
The UK markets may be attracting further international investor interest on valuation grounds and prospects for a broad return to economic growth, and in the year to date the FTSE100 is ahead by 10.2% and the FTSE250 by 16.3%.
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These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees.