Gold (GC=F): -$2.50 (-0.14%) to $1,812.50 per ounce
10-year Treasury (^TNX): -11.9 bps to yield 1.1810%
And bounce back on Tuesday
Major indices jumped, with the Dow clawing back more than 1% on the day as traders snapped up bargains.
The quick, bullish reversal and return to last weeks’ type of numbers show the fickle nature of the market, and even more so, how much perception affects judgment and confidence.
In other words, did the Delta variant disappear in one day? Not at all. What changed between Monday and Tuesday was the sentiment of how badly the new variant will stall recovery. Tuesday gains were seen throughout the key indices.
However, “When it comes to leisure and services, a significant amount. And when it comes to global reopening, also a significant amount,” he told Yahoo Finance Live. “That’s what the market’s digesting.”
“Take this next step with a heavy dose of caution.”
“We are keeping the spread of the variant first identified in India under close observation and taking swift action where infection rates are rising,” he said. “I urge everyone to be cautious and take responsibility when enjoying new freedoms today in order to keep the virus at bay.”
Cases of the variant have more than doubled in a week in the U.K., defying a sharp nationwide downward trend in infections and deaths won by hard-earned months of restrictions and a rapid vaccination campaign.
Gaps in vaccination rates among regions and demographics causing panic in markets
The Delta variant, which is driving a surge of new cases across the U.K. and the U.S., and sent the safe-haven 10-year Treasury bond yield (TNX) to its lowest levels since early March. In Los Angeles, indoor masking requirements have made a comeback, with other regions considering similar measures.
Continued caution mixed with optimism
Delta variant combined with major sectors of populations either not having the opportunity to get vaccinated, or even worse, choosing not to get vaccinated, will draw this tragic storyline out much longer than it should.
This is to be considered the major threat to full recovery in 2021.
In last weeks article we discussed how COVID and economic recovery will be faster in countries and areas with greater infrastructure and deployment of vaccines.
Likewise, market sectors that have been most affected by shutdown, ie hospitality, retail, tourism and travel, are at risk of further restrictions if subsequent outbreaks continue.
In contrast, and as mentioned in another recent article, education and the health sector have remained relatively constant, with the heath industry actually surging throughout the pandemic.
In summary, any 2021 investment evaluation must account for the current and future climate, on top of the regular criteria such as investor and portfolio profile, risk tolerance, anticipated goals and the range of alternative options.
Trends in stock and market movements depend on many factors, and in 2021, COVID recovery is a strong influence. Yet as always, investment opportunities abound.
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