By Herbert Lash
NEW YORK (Reuters) – Global equity markets recovered from one-month lows on Monday as robust U.S., China and euro zone factory data offset news of new COVID-19 lockdowns, while the dollar and gold rose on skittishness over the U.S. presidential election.
U.S. manufacturing activity accelerated more than expected last month, with new orders jumping to their highest in nearly 17 years, while Chinese factory activity expanded at its fastest pace in a decade and euro zone manufacturing also quickened.
The PMI surveys eased growing concerns about global growth in the face of a resurgent pandemic that had pushed MSCI’s world equity index down almost 8% over the prior three weeks.
Still, the dollar hit one-month highs against a basket of peers as risk sentiment, which has grown over the past week, remained sour on election jitters and as expected volatility in major currencies rose to its highest level since April.
U.S. Treasury yields mostly drifted lower as investors braced for an eventful week that includes a Federal Reserve meeting and the October unemployment report.
“A lot is going to depend on the outcome of the election and we might not get that outcome tomorrow night,” said Kim Rupert, managing director of global fixed income analysis at Action Economics in San Francisco.
MSCI’s global benchmark <.MIWD00000PUS> of equity performance in 49 countries advanced 1.01% to 556.56 and its index for emerging markets stocks <.MSCIEF> rose 0.88%.
Europe’s broad FTSEurofirst 300 index <.FTEU3> added 1.59% to 1,346.48, while on Wall Street the Dow Jones Industrial Average <.DJI> rose 1.28%, the S&P 500 <.SPX> gained 0.90% and the Nasdaq Composite <.IXIC> dropped 0.04%.
Analysts are concerned that an uncertain election outcome could cloud the prospect for more fiscal stimulus and its size, which likely will depend on which party has a Senate majority.
Republican President Donald Trump trails Democratic challenger Joe Biden in national opinion polls, but polls in the swing states that will decide the election show a closer race.
The VIX volatility index <.VIX>, which rose to its highest in four months last week, eased almost half a point to 37.55.
Renewed lockdowns in Europe and parts of the United States have dimmed the outlook for fuel consumption, keeping crude prices well under $40 a barrel.
Brent crude futures <LCOc1> rose $0.78 to $38.72 a barrel. U.S. crude futures <CLc1> gained $0.75 to $36.54 a barrel.
Brent earlier had slumped to $35.74 a barrel, a level not seen since late May. U.S. crude slid as low as $33.64. [O/R]
Coronavirus cases surged last week, with Europe crossing the bleak milestone of 10 million total infections, while a record surge in U.S. cases is killing up to 1,000 people a day.
In currencies, the UK pound <GBP=> fell 0.34% to $1.2897 after hitting its lowest in almost four weeks on news of the national lockdown. The euro <EUR=> was last down 0.19%, at $1.1625.
The Japanese yen <JPY=> weakened 0.18% versus the greenback to 104.84 per dollar.
Spot gold prices <XAU=> rose 0.84% to $1,893.66 an ounce.
Yields on the 10-year U.S. Treasury <US10YT=RR> note fell 1.7 basis points to 0.8417%.
(Reporting by Herbert Lash; additional reporting by Danilo Masoni in Milan; Editing by Susan Fenton, Steve Orlofsky and Dan Grebler)
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