(08 October 2020)DAILY MARKET BRIEF 1:US Equities Recover on Renewed Stimulus Hopes
Wall Street bounced back on Wednesday amid renewed optimism over further stimulus. After President Donald Trump surprisingly cancelled negotiations with Democrats on their $2.4 trillion stimulus bill proposal, he urged Congress to vote on a series of separate bills that would comprise support for the airline industry, small businesses, and individuals. Airline shares surged, along with consumer discretionary and industrials.
The bullish trend in US stocks was capped by the Fed’s minutes from the September meeting, which showed that central bank members couldn’t agree on the implementation of a range of new monetary policy principles that were unanimously voted in August. It has to do with the higher inflation target than the usual 2%.
The Dow was the best performer, adding 1.91%. The S&P 500 and Nasdaq rose 1.67% and 1.88%, respectively. The Dow and Nasdaq have updated their highest level in over a month, while the S&P 500 hovers near the monthly peak.
After Trump’s tweets requiring support for Airlines, American Airlines and United Airlines surged over 4% and Delta Air Line rose over 3%.
The tech sector recovered from Tuesday losses even after the Congress released a report criticizing the monopoly of Google and other giants and calling for a break-up.
Tesla rose over 3% after CEO Elon Musk stated in a company memo that the firm had a target of delivering 500,000 cars by the end of 2020.
In Asia, equities are mostly bullish on Trump’s confusing tweets that call for at least a partial approval of further stimulus.
Chinese markets continue to be closed this week for a national holiday. Investors will monitor China’s Caixin Services Purchasing Managers Index due for release tomorrow.
The Australian S&P/ASX 200 closed higher by 1.09%. Earlier this week, the government’s new budget came with generous fiscal support.
At the time of writing, Japan’s Nikkei 225 is up 0.89%, and South Korea’s KOSPI has added 0.41%. Hong Kong’s Hang Seng Index has dropped 0.89%.
European stocks will be mixed in early trading on Thursday, judging by futures on the main indexes. Still, bulls will dominate.
In individual corporate news, Citigroup shares dropped in after-hours trading after the Office of the Comptroller of Currency and the Fed Board imposed a $400 million penalty and issued law enforcement action over the company’s risk management issues. Citigroup stock fell 1.4% in after-hours trade.
Korean smartphone and electronics maker Samsung said that its Q3 profit likely surged 58% from last year, beating analysts’ forecasts. Operating profit likely came in at 12.3 trillion Korean won ($10.5 billion), up from 7.78 trillion in Q3 2019. Analysts expected 10.5 trillion. The increase was likely driven by a boost in smartphone sales, especially amid Huawei problems.
