July 1, 2020 / 8:47 AM / 2 days ago

Manufacturing, vaccine data power stocks higher; U.S. dollar dips

NEW YORK (Reuters) - Stocks across the globe rose on Wednesday following data pointing to a recovery in manufacturing and on bets for a COVID-19 vaccine, while the risk-on mood pushed the U.S. dollar lower.

FILE PHOTO: The Wall Street sign is pictured at the New York Stock exchange (NYSE) in the Manhattan borough of New York City, New York, U.S., March 9, 2020. REUTERS/Carlo Allegri/File Photo/File Photo

Germany’s manufacturing sector contracted at a slower pace in June, while activity in the United States hit a 14-month high. French factory activity rebounded into growth, and activity in China’s factories offered further signs that the world’s second-largest economy may have passed the worst of the devastation caused by the pandemic.

On Thursday, the market’s focus will be on the U.S. non-farm payrolls report for June.

Pfizer shares (PFE) jumped 3% after a COVID-19 vaccine developed jointly with Germany’s BioNTech (BNTX.O) was found to be well tolerated, the fourth early-stage drug to show promise in human testing.

The news comes as a Reuters analysis showed coronavirus cases more than doubled in 14 U.S. states last month and fears are growing that the case-load could prompt fresh lockdowns.

“Pfizer news was certainly an impetus for the market to move even higher but in general it is this very positive momentum, looking beyond this re-spreading of the virus, looking beyond that to eventual treatments, eventual vaccine and eventual safe openings of the economy,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

The Dow Jones Industrial Average .DJI fell 77.91 points, or 0.3%, to close at 25,734.97, the S&P 500 .SPX gained 15.57 points, or 0.50%, to 3,115.86 and the Nasdaq Composite .IXIC added 95.86 points, or 0.95%, to 10,154.63.

The pan-European STOXX 600 index rose 0.24% and MSCI’s gauge of stocks across the globe .MIWD00000PUS gained 0.45%.

Emerging market stocks rose 0.60%, while Japan’s Nikkei futures NKc1 lost 0.45%.

Overnight, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS closed 0.43% higher.

Graphic: World financial markets in 2020 - here

The stronger data and vaccine news weighed on the dollar, which has been bid on days when traders have been less risky.

“There’s definitely a risk-on tone to the market, which continues to bet on the fact that we’re past the worst point of COVID. But I think the jury is still out on that judgment,” said Boris Schlossberg, managing director at BK Asset Management in New York.

“There’s a significant risk of reclosing some of the states. There’s still a lot of risk-off flows, and the dollar could be the beneficiary of those flows,” he added.

The dollar index =USD fell 0.256%, with the euro EUR= up 0.18% to $1.1251. The Japanese yen strengthened 0.45% versus the greenback at 107.46 per dollar, while Sterling GBP= was last trading at $1.2477, up 0.63% on the day.

The global rise in manufacturing activity put a bid under energy prices, also supported by a bigger-than-expected drop in U.S. crude inventories.

“Largely we are moving forward in the way of demand and not backward, despite the negative view of coronavirus cases rising,” said Tony Headrick, energy markets analyst at CHS Hedging.

U.S. crude CLc1 recently rose 1.2% to $39.74 per barrel and Brent LCOc1 was at $41.93, up 1.6% on the day.

Treasury yields also rose with the risk-on sentiment.

FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, May 20, 2020. REUTERS/Staff/File Photo

Benchmark 10-year notes US10YT=RR last fell 8/32 in price to yield 0.6774%, from 0.653% late on Tuesday.

The 30-year bond US30YT=RR last fell 11/32 in price to yield 1.4245%, from 1.411%.

Gold XAU= prices rose to their highest in nearly 8 years at $1,788.96 an ounce, and recently dropped 0.6% to $1,770.57 an ounce. [GOL/]

Reporting by Rodrigo Campos; Additional reporting by Tom Arnold in London, Stephanie Kelly, Chuck Mikolajczak and Gertrude Chavez-Dreyfuss in New York, Lucia Mutikani in Washington; Editing by Diane Craft and Dan Grebler

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