US and European stock markets made modest gains, Friday, after days of records, as concerns about the pandemic sparked a surprise collapse in US consumer confidence.
On Wall Street, the Dow and S&P 500 eked out a fourth consecutive record close and modest gains for the week, amid thin summer trading.
European equities edged higher to cap the week, with Frankfurt's DAX 30 momentarily breaching the 16,000-point mark for the first time and Paris briefly reaching a 21-year high.
US shares drifted higher at the open, but retreated after the University of Michigan reported its consumer sentiment index plunged to its lowest level in a decade as the Delta variant of Covid-19 continues to spread.
"There is little doubt that the pandemic's resurgence due to the Delta variant has been met with a mixture of reason and emotion" from consumers, the survey's chief economist, Richard Curtin said.
The index fell 13.5 percent -- one of the largest declines ever recorded -- to 70.2 due to "dashed hopes that the pandemic would soon end," and the correct assessment that the economy will suffer, he added.
Healthy earnings
Earnings season is winding down but strong quarterly results have helped buoy markets on both sides of the Atlantic.
"This has been a common feature of the markets recently, small and steady gains that have seen European stocks push into record territory," said Craig Erlam, senior market analyst at OANDA.
The gains in Europe also have been driven by strong Covid-19 vaccination programs that have enabled countries to loosen restrictions, Erlam said.
But rising US infections from the Delta variant, and mixed inflation data, will turn attention to economic data, next week, notably retail sales, for a better read on the prospects for the world's largest economy.
Further evidence of inflation pressures after mixed data this week, would likely prompt the Federal Reserve to start to roll back its massive stimulus program sooner than expected.
Fed chief Jerome Powell is due to address the annual central banking conference in Jackson Hole, Wyoming, later this month, which could be the occasion for the first promised advance notice of a plan to taper the monthly pace of bond buying.
The worry is that tapering, along with an interest rate increase to contain inflation, could hamper the recovery.
"Global investors are assessing the implications of the spread of the Delta virus, the possible tapering by the Fed, and China's clampdown," said Geir Lode, of Federated Hermes.
In Asia, stock markets closed lower, following a broadly positive week, as the Chinese government tightens its grip on the world's second-biggest economy.
Crude prices extended their recent sell-off fuelled by concerns that the Delta mutation would hurt demand, with the International Energy Agency warning as much in a report, on Thursday.
AFP