(04 AUGUST 2020)DAILY MARKET BRIEF 1:Equities rise on encouraging data

US and European stock markets advanced on the back of promising economic data on Monday. Technology stocks led gains. The DAX rallied 2.71% and Nasdaq (+1.47%) renewed record as investors continued piling into technology stocks favourable for the stay-home business conditions.

Meanwhile, US policymakers are discussing on the next fiscal stimulus package, and there is a chatter that Monday talks were productive. We expect a new fiscal aid package of around $1.5-2 trillion to get approval in the coming weeks.

Call it a market rally, or a stock market inflation, the global equity markets are poised for more gains on hope that more stimulus would support economies, or at least the stock prices.

Major Asian indices followed up on New York session gains. The ASX 200 rebounded 1.89%, the Hang Seng advanced 0.83%, as the Nikkei (+1.47%) reversed yesterday’s weakness.

The US dollar, treasuries and gold were steady.

The Reserve Bank of Australia (RBA) maintained the status quo at today’s meeting but maintained its accommodative approach on expectation that the post-Covid recovery would be uneven and bumpy. The bank pledged to keep its interest rate at the actual all-time low until it sees material progress towards full employment and the 2-3% inflation target. The AUDUSD remains bid near the 0.7100/0.7150 area, but the broad based USD weakness is responsible for a part of the recent gains, and a further recovery in the greenback could settle the Aussie below the 0.70 cents mark before a further positive attempt.

Released yesterday, strong manufacturing PMI surveys from Asia, Europe, and the US hint at a solid boost in services data, due Wednesday, as well.