After an initial hint of contagion, European and US equities looked past Asian concerns over China’s regulatory crackdown, closing the day with modest gains at or near record highs. Meanwhile the real story in the rates markets has been the record move decline in the 10y US real rate.
The Sydney lockdown is in its fifth week and looks set to be extended well beyond July 30. Given the high transmission rates of the delta variant, snap lockdowns are likely to remain a ‘tool of first resort’ in controlling the virus until vaccination rates lift.
Strong earnings continue to outweigh Delta concerns with the S&P500 reaching a new record high, So far 87% of companies reporting have beaten expectations and if maintained would be the strongest earnings beat since 2008.
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