European stocks and overall stock indexes traded in the green on Friday, recovering some of the previous session's losses that pushed the DAX 30 to six-week lows.
Investors appear to be refocusing on global growth prospects despite concerns that the peak of the post-pandemic recovery has passed. At the same time, news that Pfizer and BioNTech are developing a vaccine for Covid-19 to combat the delta variant came as a relief as coronavirus variants are spreading globally, hurting the economic outlook. In addition, finance ministers and central bankers from the G20 will meet in Venice on Friday to discuss corporate tax reform and the prospects for economic recovery.
The biggest concerns from developed markets are in Asia, where Japan's Nikkei 225 has fallen for three sessions in a row, slipping to near 8-week lows and retreating more than 2.6 percent on a weekly basis. Market participants retreated amid fears that the global spread of the delta variant would stall the economic recovery. The Japanese government has decided
to impose a fourth state of emergency over coronavirus in Tokyo, which will remain in effect through the Olympics, until August 22.
In the bond markets, local 10-year bonds were at 6-month lows of 0.026 percent, while the yield on 10-year U.S. bonds was at 5-month lows of 1.341 percent. Japan's service sector PMI came in at 48 points in June, marking the 17th consecutive month of decline.
The oil market, which saw a downward correction this week, saw a local rebound in price. Brent crude oil futures rose more than 0.5 percent due to a larger-than-expected decline in inventories. The EIA report showed that U.S. inventories fell by more than the expected 6.866 million barrels in the week ended July 2, marking the seventh consecutive week of declines. Still, Brent is on track to end the week with a price drop of about 2 percent, which may have been largely driven by Tuesday's declines on concerns that OPEC+ countries will begin to release crude production on their own, as differences between Saudi Arabia and the United Arab Emirates stood in the way of a common position.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
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