Asian equities started the session trading higher from the rebound on Wall Street, where the global indices retraced Monday’s drops as the defensive flow reduced. Although worth paying attention to the Delta variant, fears in many parts of the world have been increasing lately. U.S. infections surged more than 60% last week, topping a 16% global increase. Former FDA chief Scott Gottlieb warned that the U.S. is “vastly underestimating” the level of COVID delta spread domestically.
A new wave of infection worries could delay the reopening of global economies and trigger another reassessment of H2 growth and positioning around the Reopening and Reflation Trade. South Korea reports a record daily addition of COVID-19 infections with 1.784 new cases. Another report that traders are watching is related to vaccine effectiveness. Reports showed yesterday that a recent study suggests that one dose of the Johnson & Johnson vaccine is ineffective against the Delta variant and that those treated may need a booster shot.
On the trade front, tensions between U.S. and China have been escalating, and global macro investors are seen derisking Chinese ADRs post-DIDI development. Overall market breadth continues to dissipate as 99% of S&P 500 companies are in the buyback blackout period into next week. U.S. Earnings are on the radar this week, and the following are the two busiest weeks of the earnings season.
