(06 October 2020)DAILY MARKET BRIEF 1:US Equities Surge on Trump’s Return
US equities bounced back on Monday, driven by optimism surrounding President Donald Trump’s health condition, as he was discharged from the hospital and returned to the White House. Also, the stock market was supported by hopes of another package of stimulus.
Trump’s doctors confirmed that the president had received experimental coronavirus treatments developed by Gilead and Regeneron, sending their stocks higher by 2.3% and 7.1%, respectively.
Nevertheless, it is not the healthcare sector that led the rally. The best performers were energy, materials, and tech. 10 out of the 11 sectors in the S&P index moved higher, with the index itself gaining 1.80% to the highest level since September 16.
Nasdaq jumped 2.32%, and the Dow added 1.68%. All indexes have recovered losses incurred in the previous two or three weeks.
Equities have leveraged renewed hopes of more stimulus. On Monday, US House Speaker Nancy Pelosi discussed with Treasury Secretary Steven Mnuchin by phone and will have another call later today to discuss the potential COVID relief package. White House Chief of Staff Mark Meadows boosted investor sentiment when he said that an agreement between Republicans and Democrats is still possible, especially when Trump himself wants to get the deal done.
Meanwhile, data from the Institute for Supply Management (ISM) showed yesterday that the US services industry, which accounts for over 66% of the GDP, surprisingly accelerated and even exceeded the pre-COVID levels in September. The non-manufacturing activity index surged to 57.8 from 56.9 in August, while analysts expected a decline to 56.0.
Asian markets are mostly bullish, following the rally in US stocks. Chinese markets continue to be closed for a holiday.
In Australia, the ASX 200 added 0.35% after surging 2.6% on Monday. The Reserve Bank of Australia kept the interest rate unchanged at 0.25%. Elsewhere, the government will update its latest budget later today, which Prime Minister Scott Morrison said is the most important budget since World War 2.
At the time of writing, Japan’s Nikkei 225 is up 0.49%, South Korea’s KOSPI rose 0.21%, and India’s Nifty 50 has added 0.73%. Hong Kong’s Hang Seng Index has gained 0.75%.
European stocks are about to open mostly higher, except for German DAX and Spanish IBEX, whose futures are now flashing red.
