US, European Markets Claw Back Ground Lost In Monday Stocks Rout

Stocks markets on both sides of the Atlantic closed higher on Tuesday, recovering from losses incurred the day before when investors were stricken by fears that the fast-spreading Delta variant of Covid-19 could derail the global economic recovery.

US indices rose as did bourses in London, Frankfurt and Paris, but discerning the cause for the abrupt shift in sentiment was no easy task although bargain-hunting was seen as a factor.

Peter Boockvar, chief investment officer of Bleakley Advisory Group, said with the latest coronavirus variant continuing to spread and inflation remaining a concern for the US economy, the healthy gains on Wall Street including a 1.6 percent jump in the Dow were puzzling.

"I can't explain why we're freaked out about Delta one day and don't care the next," he said.

Wall Street saw its worst session of 2021 on Monday, while major European markets lost more than two percent.

"Stock markets (in Europe) have managed to find their footing... although for how long is debateable," IG analyst Chris Beauchamp said of Tuesday's trading.

Earlier in the day, Asian equities extended losses as the Delta variant continued to cast its shadow over trading floors, with Tokyo suffering its fifth straight loss.

Investors have been rattled in recent weeks by data showing the highly-transmissible virus surging across the world, forcing some governments to reimpose containment measures.

Even countries with elevated vaccination rates have seen a big increase in new cases, though observers point out that the jabs are keeping hospitalizations and deaths down.

The selling also has been blamed on other factors including lingering worries about possible central bank policy tightening as the economy recovers, especially if inflation proves more long-lasting than anticipated.

"These are nervy times for the markets," noted Craig Erlam, a market analyst at the online broker Oanda.

Some commentators however remain broadly upbeat about the outlook.

"Those who have been inoculated should still have good protection against the Delta variant, according to the latest hospitalization and mortality statistics," remarked JP Morgan Asset Management's Tai Hui.

"Hence, the potential risk to economic reopening is manageable, especially in regions or states where vaccination rates are high."

However, Erlam warned, "if that false sense of security also encourages greater risk taking -- like removing all restrictions during a surge, for example -- the second half of the year may not be as bright as many hoped."

Oil prices climbed after tumbling Monday on slowing demand prospects and after OPEC+ crude producers agreed to increase output modestly starting next month.