(New York) North American markets rebounded sharply on Monday and the Dow Jones erased the losses of the previous week, reassured by hopes that the Omicron variant would be less virulent than initially feared.
Bond rates on Treasuries have risen, with US inflation and Fed policy in the crosshairs.
According to final results at the close, the Dow Jones index gained 1.9% to 35,227.03 points. The NASDAQ regained a third of the ground lost the week before, gaining 0.93%, to 15,225 points. The broader S&P 500 Index climbed 1.2% to 4,591.67 points. The S & P / TSX Composite Index closed 227.8 points higher at 20,861.10 points.
“Preliminary data on the new variant suggests that Omicron appears to be causing relatively mild infections,” which has boosted investor morale, said Wells Fargo analysts.
On Sunday, Anthony Fauci, chief medical adviser to US President Joe Biden, himself said: “So far, it does not appear to be very serious. ”
In addition, the mayor of New York, Bill de Blasio, went on the offensive against the virus, announcing that all businesses and private companies in the city will require their employees to be vaccinated to come to work from December 27. .
Out of a population of 8.5 million, 6.5 million New Yorkers have received at least one dose of the vaccine, according to city hall data.
The timing of indicators was meager at the start of the week, but the market was already positioning itself for Friday’s release of US inflation for November (CPI), a much anticipated figure.
Analysts believe that the consumer price index will peak at 6.7% over one year against, + 6.2% the month before. Over one month, they forecast + 0.7%, against + 0.9% in October.
These expectations were added to the fact that the Fed is due to meet next week and that it could “reduce its monetary support more quickly and pave the way for a rate hike sooner”, underlined Joe Manimbo, specialist in the market of the bonds. changes to Western Union.
As a result, yields on 10-year Treasuries edged up to 1.43% from 1.3% on Friday, as the greenback rallied against the euro.
For Peter Cardillo of Spartan Capital Securities, “the market is starting to focus on two factors”.
“On the one hand, the activity will survive despite the new variant. On the other hand, the Fed is changing its policy “by being more hawkish in the face of inflation, the analyst told AFP.
“This is not necessarily negative for the market, because the Fed is starting to realize that inflation is serious and that it needs to be tackled,” he added.
All sectors of the S&P 500 were anchored in the green, driven by industrial stocks (+ 1.6%), but also those of the energy sector (+ 1.5%) while crude prices ended sharply .
Stocks in the traditional economy have had a strong resurgence, such as airlines (Delta at + 6%, American Airlines at + 7.9%) or cruise lines (Royal Caribbean at + 8.3%, Carnival at + 8%).
Moderna, a vaccine maker, dropped 13.5% as one of its officials on Sunday suggested that the effectiveness of vaccines could be reduced against the Omicron variant. Pfizer (- 5.1%) and its German partner BioNtech (- 18.7%) also released ballast.
GCP Applied Technologies stocks jumped 17.1% to US $ 31.64 to approach Saint Gobain’s offer of US $ 32 per stock. The French group has reached an agreement to buy the American specialist in construction chemicals for $ 2.3 billion (2 billion euros).
The American news site BuzzFeed, known for its viral content but also for its long-term surveys, has made a discreet entry on Wall Street.
Its merger with a Spac on the one hand did not bring all the money hoped for, investors, as they are entitled to, having in fact recovered most of the 288 million dollars that had been raised. The group is expected to recover $ 16 million in new money alone. BZFD stock, which traded below $ 10, finished down 11% to US $ 8.56.
The Canadian dollar was trading at 78.25 US cents, from 78.05 US cents on Friday.
In Canada
All 11 major sectors of the TSX were up, with 9 increasing by at least 1%. Consumer discretionary rose 2.2%, while health care rose 1.9%.
Materials rose 1.1% on high copper prices.
However, the price of gold has fallen as the yield on 10-year bonds rises, and upcoming central bank meetings will likely outline plans to hike interest rates in 2022.
The price of gold was down US $ 4.40 to US $ 1,779.50 an ounce, and copper was up 7.1 cents to nearly US $ 4.34 per pound.
The Bank of Canada is expected to announce on Wednesday that it expects rates to start rising in the first quarter due to improving labor markets and inflation topping 3% for seven months. It would be sooner than she had reported before.
In the United States, the Federal Reserve could double the pace of bond reduction and raise interest rates until mid-2022.
Technology was one of the weakest industries in the United States. It gained 1.5% in Canada, with Dye & Durham shares climbing 9.3% as the company announced a deal to buy the TELUS Financials Solutions business for $ 500 million.