The dollar neared its year-high and bonds rallied further on Wednesday, as the rapid spread of the Delta coronavirus variant displaced inflation as investors’ primary concern and sent them rushing for safe-haven assets.
European stocks also rose ahead of a European Central Bank meeting on Thursday that is expected to convey a dovish tone, with the benchmark STOXX index of the region’s 600 largest shares up 0.9%.
Last week, data showing a surge in U.S. consumer prices in June had sparked fears that the Federal Reserve could bring a quicker end to emergency stimulus measures.
The shift from a debate over whether price spikes are transitory to outright fear of the impact of the latest COVID-19 surge had pushed the U.S. 10-year yield down more than 20 basis points in the space of a week as investors have moved into safe-haven assets.
The S&P 500 slumped nearly 4% from highs last Wednesday to lows on Monday before rebounding.
The more positive mood in European shares on Wednesday contrasted with a 0.13% fall in MSCI’s broadest index of Asia-Pacific shares outside Japan, as South Korea reported a daily record of new infections.
