Stocks lag, dollar advances on COVID-19 concerns

By Matt Scuffham NEW YORK (Reuters) - Global stocks lagged and the dollar advanced in volatile markets on Monday, with sentiment hit by increasing COVID-19 cases, delays in vaccine supplies and uncertainty over a $1.9 trillion U.S. stimulus plan. Equity markets have scaled record highs in recent days on bets vaccines will start to reduce infection rates worldwide and on a stronger U.S.

Reuters January 26, 2021 03:05:19 IST
Stocks lag, dollar advances on COVID-19 concerns

COVID-19 concerns" src="https://images.firstpost.com/wp-content/uploads/reuters/01-2021/26/2021-01-25T004752Z_1_LYNXMPEH0O019_RTROPTP_2_GLOBAL-MARKETS-ASIA.jpg" alt="Stocks lag dollar advances on COVID19 concerns" width="300" height="225" />

By Matt Scuffham

NEW YORK (Reuters) - Global stocks lagged and the dollar advanced in volatile markets on Monday, with sentiment hit by increasing COVID-19 cases, delays in vaccine supplies and uncertainty over a $1.9 trillion U.S. stimulus plan.

Equity markets have scaled record highs in recent days on bets vaccines will start to reduce infection rates worldwide and on a stronger U.S. economic recovery under President Joe Biden.

However, investors are wary about towering valuations amid questions over the efficacy of the vaccines in curbing the pandemic and as U.S. lawmakers continue to debate a coronavirus aid package.

"The risk for these markets is that, after a bumper couple of months, investors may start to wonder whether they're looking a little frothy," said Craig Erlam, senior market analyst at OANDA Europe.

U.S. stocks were mixed. The Nasdaq index hit a record high on hopes of bumper earnings later this week from mega-cap technology companies but the Dow Jones Industrial Average index struggled to keep pace.

By 2:51 PM ET, the Dow Jones Industrial Average fell 107.51 points, or 0.35%, to 30,889.47, the S&P 500 gained 6.8 points, or 0.18%, to 3,848.27 and the Nasdaq Composite added 67.86 points, or 0.5%, to 13,610.92.

European shares closed at two-week lows as a slump in German business morale underscored the damage from tighter COVID-19 restrictions.

The pan-European STOXX 600 index reversed early gains and finished 0.8% lower. The German DAX fell 1.7%, France CAC 40 was down 1.6% and the UK's FTSE 100 declined 0.8%.

The MSCI world equity index, which tracks shares in 49 nations, rose 0.48 points or 0.07%, to 667.17.

All eyes were on Washington, D.C., as U.S. lawmakers agreed that getting COVID-19 vaccines to Americans should be a priority even as they locked horns over the size of the pandemic relief package.

Financial markets have been eyeing a massive package, though disagreements have meant months of indecision in a country suffering more than 175,000 COVID-19 cases a day with millions out of work.

"The immediate question now is when stimulus aid will be approved and how much?," asked Christopher Grisanti, chief equity strategist at MAI Capital Management.

The dollar advanced to a near one-week high against a basket of currencies, as volatility in stock markets around the globe sapped investors' appetite for riskier currencies.

The dollar index, which tracks the greenback versus a basket of six currencies, rose 0.129 points or 0.14 percent, to 90.367. The euro was down 0.28 percent, at $1.2136.

Gold prices pared gains on Monday as the dollar edged higher. Spot gold prices rose $3.06 or 0.17 percent, to $1,855.61 an ounce. U.S. gold futures settled 0.1% lower to $1,855.20 per ounce.

As global COVID-19 cases inched toward 100 million, with more than 2 million dead, investors digested mixed news on the progress of vaccine roll-outs.

Moderna Inc said it believes its COVID-19 vaccine protects against new variants found in Britain and South Africa. Moderna shares rose 10.3%.

AstraZeneca is not doing enough to try to resolve a dispute over delayed COVID-19 vaccine deliveries to the European Union, the bloc's top health official said, as news emerged the drugmaker is also facing supply problems elsewhere.

U.S. investors were also awaiting a busy earnings week, with tech giants Apple Inc, Facebook Inc, Tesla Inc and Microsoft Corp all due to report results.

Sentiment in Asia was boosted by a report that China had surpassed the United States as the largest recipient of foreign direct investment in 2020, with $163 billion in inflows.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 9.21 points or 1.28%.

In commodity markets, Brent crude settled at $55.88 a barrel, up 47 cents or 0.85%. U.S. crude settled at $52.77 a barrel, up 50 cents or 0.96%.

(Reporting by Matt Scuffham; Additional reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Editing by Andrea Ricci)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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