(01 December 2020)DAILY MARKET BRIEF 1:Wall Street Bearish on Monday

(01 December 2020)DAILY MARKET BRIEF 1:Wall Street Bearish on Monday

1 December 2020, 11:57
Jiming Huang
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US equities declined on Monday, but that didn’t prevent the benchmark S&P 500 index from securing the best November ever. Traders were taking profits after a robust rally fuelled by vaccine optimism. Besides this, stocks took a pause amid deteriorating tensions between the US and China.

On the last day of November, the S&P 500 fell 0.46%, Dow Jones dropped 0.91%, and Nasdaq declined slightly by 0.06%. Nine out of the S&P’s 11 major sectors closed in the red, with the energy index slumping 5.4%.

The Monday bearishness can be explained by investors’ profit-taking after a strong November, as they are waiting for fresh updates about the COVID vaccine or economic stimulus. US Health Secretary Alex Azar said that the first two vaccine products against the new coronavirus could be rolled out before Christmas. Meanwhile, Moderna’s shares jumped about 20% after it revealed that it would apply for US and European emergency authorization for its vaccine later on Monday.

The US stock futures are currently bullish, suggesting that the market is already recovering.

For November, the S&P 500 jumped 10.8%, the Dow rose 11.9%, and the Nasdaq surged 11.8%. The S&P and Nasdaq saw the biggest monthly gain since April.

IHS Markit rose over 7% after S&P Global agreed to buy the financial data provider for $44 billion, which could become the biggest corporate acquisition of the year. However, antitrust experts told Reuters on Monday that the deal would face strong resistance from the administration of President-elect Joe Biden.

Video communication service provider Zoom reported Q3 results that topped analysts’ expectations and provided positive guidance. Zoom now anticipates 329% in revenue growth in the fourth quarter, which is a slight slowdown from the previous quarter. Nevertheless, the stock price fell over 5% as investors reacted to expectations that the rate of revenue growth would moderate.

In Asia, stocks are moving higher in early trading on Tuesday, starting December on a positive note. Investors focus on vaccine optimism even as the number of COVID cases continues to surge.

At the time of writing, China’s Shanghai Composite has surged 1.54%, and the Shenzhen Component rose 1.52%. Data released a few minutes ago showed that the Caixin manufacturing PMI rose to 54.9 in November, after 53.6 in October. Analysts expected a decline to 53.5. The data follows a series of economic updates that point to China’s robust recovery from the coronavirus crisis.

Meanwhile, the Sino-US tensions are deteriorating as the Trump administration wants to add China’s biggest chipmaker SMIC and oil behemoth CNOOC to a blacklist of companies that are allegedly owned or controlled by the Chinese military. US investors won’t be able to buy shares in the blacklisted companies from 2021.

Hong Kong’s Hang Seng Index is up almost one percent. The increase in the number of coronavirus cases led to tougher restrictive measures in the city that will take effect on Wednesday.

Japan’s Nikkei 225 closed 1.35% higher, and South Korea’s KOSPI is up 1.67%.

In Australia, the ASX 200 closed 1.08% higher. The Reserve Bank of Australia left the interest rate unchanged at a record low of 0.10%.

By Strategy Desk


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