(Bloomberg) — Stocks slumped around the globe and bonds climbed as the spread of the delta variant cast a pall over the economic recovery.
All major groups in the S&P 500 retreated, led by commodity, financial and industrial companies. Airlines and cruise operators tumbled amid concern over further travel restrictions, while a gauge of small caps slid about 2%. European shares headed for their biggest slide this year, following a selloff in Asian equities. Meantime, Treasury 10-year yields fell to the lowest since February. Oil sank after OPEC+ agreed to boost supply into 2022.
The resurgence of Covid-19 is stoking a risk-off mood as investors consider whether new lockdown restrictions will sap the economic rebound and reverse an equity surge that had driven stocks to record highs. The decline in bond yields may be a signal of cracks in the global recovery, putting the onus back on monetary and fiscal authorities to support ailing economies even as inflation remains elevated.
“Many investors are wondering whether they can justify holding equities when valuations are so stretched and at a time when they are forced to reprice some of the optimism they had baked in with the grand opening of major economies,” said Fawad Razaqzada, an analyst at ThinkMarkets.
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Some key events to watch this week:
Reserve Bank of Australia meeting minutes TuesdayEuropean Central Bank rate decision ThursdayBank Indonesia rate decision ThursdayU.S. existing home sales ThursdayThe Tokyo Summer Olympics begin Friday
Here are some of the main market moves:
Stocks
The S&P 500 fell 1.6% as of 9:54 a.m. New York timeThe Nasdaq 100 fell 1.2%The Dow Jones Industrial Average fell 1.8%The Stoxx Europe 600 fell 2.5%The MSCI World index fell 1.7%The Russell 2000 Index fell 2.2%
Currencies
The Bloomberg Dollar Spot Index was little changedThe euro rose 0.1% to $1.1819The British pound fell 0.4% to $1.3714The Japanese yen rose 0.9% to 109.07 per dollar
Bonds
The yield on 10-year Treasuries declined eight basis points to 1.21%Germany’s 10-year yield declined four basis points to -0.39%Britain’s 10-year yield declined eight basis points to 0.54%
Commodities
West Texas Intermediate crude fell 5.2% to $68.08 a barrelGold futures were little changed
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