*Investors also were keeping an eye on Europe. The lack of a clear winner in Germany’s election combined with a new batch of speeches from most central bankers may slow the rally down. In addition, investors’ eyes are cautiously monitoring the situation in China where both the energy and liquidity crises are worsening, increasing worries of a knock-on impact on other economies.*
*U.S. cases averaged about 120,000 per day over the last week, according to data compiled by Johns Hopkins University, down from a 7-day average of more than 166,000 cases at the peak of this latest wave in early September. Pfizer CEO Albert Bourla said on Sunday that he thought the U.S. could return to normal “within a year” though annual vaccinations might be needed.*
In public health news, chief executive of Pfizer Inc. _ said the company is expecting to submit data from late-stage trials of its COVID-19 vaccine in 5- to 11-year-old children to the U.S. Food and Drug Administration within days, raising hopes that another key patient group will soon be eligible for shots.
All in all, it’s a positive story as we have a strong economic macro story underpinning everything. Optimism was reflected in central banks signaling their intent to remove pandemic-era stimulus gradually, which in turn was lifting bond yields.
Europe’s STOXX 600 index ended lower as declines in tech stocks offset gains in banks and energy, while German shares hit 10-day highs.
The oil price surge is stoking speculation that global inflation will prove longer-lasting than anticipated, forcing central banks to act and benefiting so-called reflation investments, which rise in tandem with rates.
*Coming on top of this year’s 300% surge in European gas prices, the price rises risk further inflaming inflation expectations and hastening the end of super-cheap money.*
Goldman Sachs forecast Brent to hit $90 per barrel by year-end, noting “the current global oil supply-demand deficit is larger than we expected, with the recovery in global demand from the Delta impact even faster than our above-consensus forecast.”
The rise in U.S. yields, especially on an inflation-adjusted basis, is also lifting the dollar. The dollar index rose 0.146%, with the euro down 0.15% to $1.1697.
*Worries persisted about China.*
A power supply crunch that is triggering an industrial contraction and pressuring the economic outlook is adding to concerns stemming from property firm Evergrande, which missed a bond coupon payment last week and faces another in coming days.
Hong Kong-listed shares in Evergrande’s electric car unit plunged as much as 26% after it warned it urgently needed a swift injection of cash.
Still, Chinese blue chip shares gained 0.5%, thanks to another cash injection from the central bank and hopes the release of Huawei executive Meng Wanzhou would reset ties with the West.
Elsewhere, Brent closed at the highest since 2018 amid signs of a global energy crunch. While the benchmark met some resistance as it neared the $80-a-barrel level, Goldman Sachs Group Inc. said it could hit $90 by year-end as the market is in a bigger deficit than many realize.
*Some corporate highlights:*
Amazon.com Inc.’s price target was cut at Morgan Stanley, which said the online retailer’s profits could come under pressure as a result of a rising headcount and higher wages.
Facebook Inc. is pausing work on rolling out an Instagram Kids site after the social-networking company came under criticism for its negative effect on children, especially on teenage girls.
Wells Fargo & Co. agreed to pay $37 million to settle U.S. claims that it overcharged almost 800 commercial customers that used its foreign-exchange services.
*In Germany, preliminary results on Monday morning showed the center-left Social Democratic Party gaining the largest share of the vote with 25.7%. Angela Merkel’s right-leaning bloc of the Christian Democratic Union and Christian Social Union was seen with 24.1% of the vote. *
*But coalition negotiations, which could begin on Monday, are likely to take weeks or even months.*
By: via @AlliesFin Serve Stock Market
