Saturday, 31 October 2020

Markets mixed, Europe readies new COVID-19 restrictions

Markets were mixed on Friday.

The S&P 500 fell 1.2 percent and the Shanghai Composite fell 1.5 percent but the STOXX Europe 600 rose 0.2 percent.

Strategists at MRB Partners wrote in a note that “mounting new economic restrictions, particularly in Europe, despite being forecastable and in lagged response to the re-acceleration in COVID-19 infections, only caught investors’ attention this week, triggering sharp losses”.

Indeed, EU officials warned Europe to be ready for wider COVID-19 restrictions.

“We need to pull through this, where needed, with restrictions on everyday life to break the chain of transmission,” said EU Health Commissioner Stella Kyriakides.

The US reported a record 91,248 new cases on Thursday and reached its 9 millionth case on Friday.

Friday, 30 October 2020

Markets mixed, ECB to respond “promptly” to COVID-19 second wave

Markets were mixed on Thursday.

The S&P 500 rose 1.2 percent but the STOXX Europe 600 dipped 0.1 percent and the Nikkei 225 fell 0.4 percent.

“The earnings season so far has resulted in significant positive earnings surprises,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

The European Central Bank left interest rates and wider monetary policy unchanged at its monetary policy meeting on Thursday but hinted at more monetary stimulus in December.

“The Governing Council will carefully assess the incoming information, including the dynamics of the pandemic, prospects for a rollout of vaccines and developments in the exchange rate,” the ECB said in a statement.

Noting the rise in COVID-19 cases in Europe, ECB President Christine Lagarde said at a press conference after the meeting that the central bank had “responded very promptly...for the first wave; we will do it again for the second wave”.

Elsewhere, the Bank of Japan also left monetary policy unchanged on Thursday even as it revised its forecast of Japan's real GDP to show a 5.5 percent decline from a 4.7 percent fall in its previous projection.

Thursday, 29 October 2020

Markets fall, France and Germany back in lockdown, US faces “whole lot of pain”

Markets fell on Wednesday.

The S&P 500 plunged 3.5 percent, the STOXX Europe 600 tumbled 3.0 percent and the Nikkei 225 fell 0.3 percent.

Markets fell as the COVID-19 pandemic continued to surge globally and France and Germany announced that they were going back into lockdown.

“The virus is circulating at a speed that not even the most pessimistic forecasts had anticipated,” said French President Emmanuel Macron. “I have decided that we need to return to the lockdown which stopped the virus.”

“We need to take action now,” said German Chancellor Angela Merkel as she ordered bars, restaurants and theatres to be shut from 2-30 November.

In contrast, US President Donald Trump appears to be in denial over the severity of the COVID-19 pandemic in the US.

“We are turning the corner. We are rounding the curve, we will vanquish the virus,” Trump said at an election campaign rally in West Salem, Wisconsin.

However, Dr Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, appears to disagree, telling CNBC in an interview on Wednesday that the US is “going in the wrong direction”.

“If things do not change, if they continue on the course we’re on, there’s gonna be a whole lot of pain in this country with regard to additional cases and hospitalizations, and deaths,” said Fauci.

Wednesday, 28 October 2020

Markets fall as COVID-19 cases set new records

Markets were mostly lower on Tuesday.

The S&P 500 fell 0.3 percent and the STOXX Europe 600 fell 1.0 percent. Asian markets were mixed.

Stocks pulled back as the COVID-19 pandemic continued its own record-breaking run. Europe reported a record 230,892 new cases on Monday while the US reported an average of 69,967 new cases daily over the past seven days, the highest seven-day average on record.

“We are dealing with exponential growth,” German Economy Minister Peter Altmaier announced.

“This is a harbinger of a very tough winter that’s coming,” said Dr Bill Schaffner, an epidemiologist at Vanderbilt University.

Tuesday, 27 October 2020

Markets fall amid record high COVID-19 cases

Markets fell on Monday.

The S&P 500 plunged 1.9 percent, the STOXX Europe 600 tumbled 1.8 percent and the Shanghai Composite fell 0.8 percent.

Markets fell as the US, Russia, France and many other countries are setting records for COVID-19 infections, forcing some countries to impose new curbs.

Hopes for a stimulus deal in the US also dimmed after White House economic advisor Larry Kudlow said on Monday that talks had slowed down.

“The double whammy of a stalled stimulus bill and new highs in cases is a harsh reminder of the many worries that are still out there,” said Ryan Detrick, chief market strategist at LPL Financial.

Monday, 26 October 2020

Countries “on dangerous track” as daily COVID-19 cases hit record highs

The COVID-19 pandemic appears likely to continue to weigh on markets this week.

On Friday, World Health Organization Director-General Tedros Adhanom Ghebreyesus said during a press briefing that the world is “at a critical juncture in this pandemic” and that “some countries are on a dangerous track”.

Indeed, France reported a record 52,010 new confirmed coronavirus infections over the past 24 hours on Sunday, following a record 45,422 on Saturday.

The Spanish government on Sunday declared a national state of emergency that includes an overnight curfew. “The situation we are living in is extreme,” said Prime Minister Pedro S├ínchez.

The US reported 83,757 new COVID-19 cases on Friday, a record high. This was followed by another 83,718 cases on Saturday.

“I think the winter is going to be very difficult,” said Dr Scott Gottlieb, the former US Food and Drug Administration commissioner.

Saturday, 24 October 2020

Markets mixed, Europe and US COVID-19 cases surge

Markets were mostly higher on Friday.

The S&P 500 rose 0.3 percent, the STOXX Europe 600 rose 0.6 percent and the Nikkei 225 rose 0.2 percent.

Economic data on Friday were mixed.

The IHS Markit US PMI indices rose in October. The index for services climbed to 56.0 from 54.6 in the prior month while the index for the manufacturing sector edged up to 53.3 from 53.2.

However, the flash IHS Markit eurozone composite PMI fell to 49.4 from 50.4 in September.

“The euro zone is at increased risk of falling into a double-dip downturn as a second wave of virus infections led to a renewed fall in business activity,” said Chris Williamson, chief business economist at IHS Markit.

Indeed, Europe’s daily COVID-19 infections have more than doubled in the last 10 days, reaching a total of 7.8 million cases and about 247,000 deaths. France passed 1 million cases on Friday with a new record daily tally of more than 42,000.

The situation is little better in the US. 76,195 new cases were reported on Thursday, and the death toll could surpass 500,000 by February unless nearly all Americans wear face masks, according to the University of Washington’s Institute for Health Metrics and Evaluation.

“We are heading into a very substantial fall/winter surge,” said IHME director Chris Murray.

Friday, 23 October 2020

Markets mixed, hospitals stretched as COVID-19 surges

Markets were mixed on Thursday.

The S&P 500 rose 0.5 percent. However, the STOXX Europe 600 dipped 0.1 percent and the Nikkei 225 fell 0.7 percent.

US stocks rose amid renewed hopes for a fiscal stimulus after House Speaker Nancy Pelosi said Democrats and the Trump administration were on the verge of an agreement.

Still, the COVID-19 situation in the US remains dire as several US states reported record single-day increases in infections on Thursday and hospitals became increasingly stretched.

In Europe, France extended curfews to around two thirds of its population on Thursday. “We are already swamped,” said Bruno Megarbane, head of intensive care at the Lariboisiere hospital in Paris.

In Spain, which this week became the first European country to pass 1 million cases, Health Minister Salvador Illa said the epidemic was now “out of control” in many areas.

Thursday, 22 October 2020

Markets fall, US facing “exponential, explosive growth” of COVID-19

Markets were mostly lower on Wednesday.

The S&P 500 fell 0.1 percent and the STOXX Europe 600 fell 1.3 percent. However, the Nikkei 225 rose 0.3 percent.

A resurgent COVID-19 pandemic continued to weigh on markets, with six US states reporting record daily inceases in coronavirus-related deaths on Wednesday.

“We are not far from the period of exponential, explosive growth of #covid19 in the U.S.,” said Dr. Leana Wen, former Baltimore health commissioner, on Twitter.

Wednesday, 21 October 2020

Markets mixed, Europe faces renewed COVID-19 lockdowns

Markets were mixed on Tuesday.

The S&P 500 rose 0.5 percent while the Shanghai Composite rose 0.5 percent.

However, the STOXX Europe 600 fell 0.4 percent and the Nikkei 225 fell 0.4 percent.

While European stocks were weighed down by new restrictions on business activity and travel in several European countries to contain the rising number of COVID-19 cases, Yousef Abbasi, global market strategist at StoneX, suggested that “the market seems comfortable with the measures being taken as long as they are not large-scale stay-at-home orders”.

Still, James Griffith at CNN suggested that “much of Europe stares down the barrel of renewed coronavirus lockdowns, and a potentially miserable -- and deadly -- winter to come”, whereas China, where the COVID-19 virus was first detected, is now recovering much better.

Tuesday, 20 October 2020

Markets fall, China GDP growth below expectations

Markets were mostly lower on Monday.

The S&P 500 fell 1.6 percent and the STOXX Europe 600 fell 0.3 percent.

Earlier in Asia, markets were mixed, with the Shanghai Composite down 0.7 percent but the Nikkei 225 up 1.1 percent.

China's third quarter GDP grew 4.9 percent from a year ago, below expectations of 5.2 percent growth.

OCBC Bank’s Vasu Menon said that despite missing expectations, “when you drill down to the details, especially domestic consumption, I think that offers some room for optimism”.

Meanwhile, COVID-19 remained a concern as worldwide cases crossed 40 million on Monday, according to a Reuters tally.

Monday, 19 October 2020

Stocks rise as COVID-19 cases surge

Stocks rose last week, with the S&P 500 rising 0.2 percent.

In propelling markets higher, nvestors have largely looked past the surge in COVID-19 cases in the US and Europe.

On Friday, the US reported the most infections in a single day since July. As of Saturday, more than 8.1 million cases had been reported in the US and 219,286 people have died, according to Johns Hopkins University.

"This surge has the potential to be way worse than it was than either the spring or the summer," said epidemiologist Dr Abdul El-Sayed, Detroit's former health director.

Meanwhile, in Europe,the death toll from COVID-19 passed 250,000 on Sunday after a 44 percent increase in cases last week.

Restriction are being raised in most parts of Europe. Nighttime curfews on millions came into force in France this weekend and Switzerland required all its citizens to wear masks in indoor public places.

Saturday, 17 October 2020

Markets mixed as COVID-19 cases rise

Markets were mixed on Friday.

The S&P 500 was flat but the STOXX Europe 600 jumped 1.3 percent.

Earlier in Asia, the Shanghai Composite rose 0.1 percent but the Nikkei 225 fell 0.4 percent.

In the US, a report on Friday showed that retail sales rose 1.9 percent in September, a gain that Mike Loewengart, director of investment strategy at E-Trade Financial, said “suggests consumer strength is pretty robust”, adding that “momentum on that front could be a positive for the market as investors look for signs of recovery”.

However, another report showed that US industrial production fell 0.6 percent in September, which economists at Oxford Economics said is “one of the first real signs that the recovery is losing momentum”.

Indeed, the US could be facing a tough winter as the total number of COVID-19 cases surpassed 8 million on Friday.

The country has averaged more than 53,000 new daily cases for the past week, an increase of more than 55 percent in just over a month.

It is even worse in Europe, where cases have now overtaken the US, averaging roughly 97,000 new cases per day, up 44 percent from one week ago.

Friday, 16 October 2020

Markets fall amid surging COVID-19 cases and “nightmare” equity valuations

Markets fell on Thursday.

The S&P 500 fell 0.2 percent, the STOXX Europe 600 plunged 2.1 percent and the Nikkei 255 fell 0.5 percent.

The surge in COVID-19 cases dominated concerns, especially in Europe, where France, Germany, Italy, Poland and the Netherlands all reported record high new infections on Thursday.

Dr Hans Kluge, the head of the World Health Organisation Europe office, said death rates across the bloc could be “four to five times higher than those in April” by early next year if the pandemic is not consistently taken seriously.

However, US stocks managed to recover much of their early losses despite a report showing that claims for jobless benefits climbed 53,000 to 898,000 last week.

Still, Mark Hulbert at MarketWatch said contrarian thinking suggested that more weakness could lie ahead as investors have been extremely bullish lately.

“To put the timers’ current exuberance in perspective, consider the Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects their average recommended equity exposure. Since 2000, 99% of the HSNSI’s daily readings have been lower than where it stands today,” he said.

Indeed, Cole Smead, president and portfolio manager at Smead Capital Management, told CNBC that such bullishness has pushed US equity valuations to become a “total nightmare”.

Thursday, 15 October 2020

Markets fall as fiscal stimulus hope fades and COVID-19 cases surge

Markets fell on Wednesday.

The S&P 500 fell 0.7 percent, the STOXX Europe 600 dipped 0.7 percent and the Shanghai Composite fell 0.6 percent.

Mark Hackett, chief of investment research at Nationwide, said that the likelihood of a US fiscal stimulus soon is “fading”.

Meanwhile, on corporate earnings reports, Brent Schutte, chief investment strategist for Northwestern Mutual Wealth Management, said that it is “so far so good”.

However, Brad McMillan, chief investment officer at Commonwealth Financial Network, said that the market’s optimism might make it vulnerable to bad news as “job growth has slowed substantially even as layoffs remain very high”.

In Europe, COVID-19 is clearly the primary concern as new daily cases hit about 100,000 and countries renew curfews and lockdowns.

“We are already in a phase of exponential growth, the daily numbers show that,” said German Chancellor Angela Merkel.

Wednesday, 14 October 2020

Markets fall, COVID-19 cases "to continue to rise"

Markets were mostly lower on Tuesday.

The S&P 500 fell 0.6 percent and the STOXX Europe 600 fell 0.6 percent.

Earlier in Asia, however, the Shanghai Composite was marginally higher while the Nikkei 225 rose 0.2 percent.

Markets fell after news that US regulators paused Eli Lilly’s late-stage COVID-19 trial due to safety concerns and Johnson & Johnson halted its coronavirus vaccine trial after a participant reported an unexplained illness.

Meanwhile, the COVID-19 news around the world remained grim.

Europe is tightening measures to contain the pandemic amid a sharp rise in cases.

The Czech Republic imposed a three-week partial lockdown after reporting the region's highest new infection rate per 100,000 people while the Netherlands imposed a four-week partial lockdown.

In the US, cases are also surging again.

"Now we're back up to (about) 50,000 new cases a day. And it's going to continue to rise," Dr. Peter Hotez, dean of the National School of Tropical Medicine at Baylor College of Medicine.

Tuesday, 13 October 2020

Markets rise, could “crack pretty hard” within 18 months

Markets rose on Monday.

The S&P 500 jumped 1.6 percent, the STOXX Europe 600 rose 0.7 percent and the Shanghai Composite surged 2.6 percent.

“Investors have not lost faith that further stimulus measures will follow and that an effective COVID-19 vaccine will soon be placed on the market,” said Milan Cutkovic, market analyst at Axi.

Still, the resurgence of COVID-19 in Europe is leading to new restrictions that could hamper an economic recovery.

“Further lockdowns would jeopardise the already fragile economic recovery and have lasting effects on consumer confidence,” said Cutkovic.

DoubleLine Capital founder Jeffrey Gundlach thinks that the US may not fare much better.

“I don’t think people fully understand how many business closures there’s going to be in the next few months,” he said.

He added that within 18 months, stocks are “going to crack pretty hard”.

Monday, 12 October 2020

Markets gain amid rising COVID-19 cases

Markets rose last week, with the S&P 500 rising 3.8 percent and the STOXX Europe 600 rising 2.1 percent.

In advancing, stocks shrugged off reports of rising COVID-19 cases around the world.

On Friday, the US saw a total of 57,420 new cases, the most since 14 August, and the third consecutive day that cases exceeded 50,000.

Russia reported a record 13,634 cases on Sunday.

India reported 74,383 cases on Sunday, pushing its total caseload above 7 million.

Saturday, 10 October 2020

Markets higher on hopes for US fiscal stimulus

Markets were mostly higher on Friday.

The S&P 500 rose 0.9 percent and the STOXX Europe 600 rose 0.6 percent. The Nikkei 225 dipped 0.1 percent.

US stocks rose as fiscal stimulus talks resumed, with President Donald Trump telling Fox News that there was a good chance an accord could be reached.

“I view election uncertainty as noise and I would be a buyer on short-term volatility,” said Ben Kirby, co-head of investments at Thornburg Investment Management.

Also possibly boosting sentiment in the markets was news that Gilead Sciences's COVID-19 drug remdesivir shortened the time to recovery from the disease.

However, Reuters reported that a dozen US Midwestern states together reported a record 16,807 new cases on Thursday, with the number of hospitalisations hitting a record high for the fourth consecutive day.

Friday, 9 October 2020

Markets rise as low interest rates “clearly creating bubble elements”

Markets rose on Thursday.

The S&P 500 rose 0.8 percent, the STOXX Europe 600 rose 0.8 percent and the Nikkei 225 rose 1.0 percent.

Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note that “we do maintain a positive medium-term view for stocks into the middle of next year”.

Haefele cited fiscal stimulus, supportive central banks and medical developments as having “scope to surprise”.

Indeed, former Goldman Sachs CEO Lloyd Blankfein told CNBC that the low interest rates provided by central banks “is clearly creating bubble elements”.

“People are lending to what historically have been viewed as weak credits for very little money,” he said.

One problem is that the world entered the current COVID-19-driven economic crisis with already low interest rates.

Boston Federal Reserve President Eric Rosengren specifically cited “low rates persisting for an extended period even after the economy has made progress in the recovery” after the Great Recession ended in 2009 as making the current economic downturn even more severe.

He said that the low interest rates allowed firms to take on more leverage and “magnifies losses when bad outcomes occur”.

“I am sorry to say that the slow build-up of risk in the low-interest-rate environment that preceded the current recession likely will make the economic recovery from the pandemic more difficult,” he said.

Thursday, 8 October 2020

Markets mixed as Trump reconsiders stimulus

Markets were mixed on Wednesday.

The S&P 500 jumped 1.7 percent but the STOXX Europe 600 dipped 0.1 percent. Asian markets mostly rose but Japanese stocks were little changed.

The US stock market was given a reprieve after President Donald Trump said that he would immediately sign individual stimulus measures, if sent to him, after previously calling off talks with the Democratic party.

Meanwhile, however, the COVID-19 situation continues to be a source of concern, with the number of US cases surpassing 7.5 million on Wednesday as nine states set seven-day records for infections.

In Europe, confirmed cases passed 6 million on Wednesday, with Scotland and Belgium the latest to introduce curbs on alcohol consumption.

Wednesday, 7 October 2020

Markets mixed as Trump halts stimulus talks

Markets were mixed on Tuesday.

The S&P 500 fell 1.4 percent but the STOXX Europe 600 rose 0.1 percent and the Nikkei 225 rose 0.5 percent.

US stocks fell after President Donald Trump instructed White House officials to halt negotiations on further coronavirus stimulus.

“Walking away from coronavirus talks demonstrates that President Trump is unwilling to crush the virus, as is required by the Heroes Act,” said House Speaker Nancy Pelosi.

However, markets are still expecting stimulus eventually.

Jon Hill, senior fixed income strategist at BMP, said that a stimulus programme is still coming, just that “it will not occur until after the election”.

“Even after this news, the 10-year yields are higher than where they were yesterday morning,” noted Hill.

Dennis DeBusschere, quantitative strategist at Evercore ISI, suggested that “unwinding stimulus trades should not be taken too far”.

Tuesday, 6 October 2020

Stocks rally as Trump returns to White House

The S&P 500 rose 1.8 percent on Monday after US President Donald Trump said he would be discharged from the hospital in the evening.

Sure enough, the President returned to the White House that evening, where he was criticised for “an irresponsible mask removal and a reckless pronouncement there is nothing to fear from Covid-19”.

Still, CNBC’s Jim Cramer said that the stock market rally reflects “hope on talks between Secretary Mnuchin and Speaker Pelosi” producing an agreement on fiscal stimulus.

In addition, with former vice president Joe Biden opening his widest lead in a month in the presidential race, Ajay Rajadhyaksha, head of macro research at Barclays, said that markets “have lowered the chance of prolonged uncertainty” following the presidential election.

Monday, 5 October 2020

Trump COVID-19 illness possibly “severe”

The S&P 500 rose 1.5 percent last week, ending a four-week losing streak.

However, the index fell 1.0 percent on Friday after news that US President Donald Trump had tested positive for COVID-19

Some doctors think that the President's condition may be severe, noting that he has been started on dexamethasone.

“We give dexamethasone to patients who require supplemental oxygen,” said Dr Amesh Adalja, an infectious disease specialist at Johns Hopkins University.

Dr Daniel McQuillen, an infectious disease specialist at Lahey Hospital & Medical Center in Burlington, said that “the news conference description suggested the President has more severe illness than the generally upbeat picture painted”.

The President's illness comes as nine US states reported record increases in COVID-19 cases over the last seven days.

As the COVID-19 pandemic drags on, permanent job losses are poised to climb.

And it is a similar story in Europe, as countries report a surge in infections and renewed restrictions.

After reporting a daily record of 16,972 new COVID-19 cases on Saturday, France announced that Paris is to be placed on maximum COVID-19 alert, with bars to close for two weeks from Tuesday and restaurants to put in place new sanitary protocols to stay open.

Saturday, 3 October 2020

Markets mixed after Trump tests positive for COVID-19

Markets were mixed on Friday.

The S&P 500 fell 1.0 percent and the Nikkei 225 fell 0.7 percent but the STOXX Europe 600 rose 0.3 percent.

Markets were weighed down by news that US President Donald Trump and first lady Melania Trump had tested positive for COVID-19.

Investors were probably also disappointed by the US September employment report, which showed a gain of 661,000 jobs, the smallest since businesses reopened after lockdowns earlier this year.

“Job growth is moderating just as fiscal aid is expiring – a toxic cocktail,” wrote Oxford Economics economist Kathy Bostjancic in a note. “Despite relatively strong growth since May, employment remains a staggering 10.7 million below the pre-Covid level.”

Friday, 2 October 2020

Markets rise amid US stimulus delay and new COVID-19 restrictions

Markets rose on Thursday.

The S&P 500 rose 0.5 percent and the STOXX Europe 600 rose 0.2 percent.

Markets rose despite a dearth of positive news.

In the US, discussions on additional fiscal stimulus have made little progress, and Goldman Sachs analysts in a recent report called the prospect of a new round of fiscal stimulus before the year’s end “unlikely”.

In Europe, the COVID-19 pandemic remained a concern as Italy extended its state of emergency until January, the Spanish capital Madrid goes back under lockdown and the UK announced an extension of localised restrictions in northern England.

Thursday, 1 October 2020

Markets mixed, “incredible economic momentum” to drive stocks higher

Markets were mixed on Wednesday.

The S&P 500 rose 0.8 percent but the STOXX Europe 600 dipped 0.1 percent and the Shanghai Composite fell 0.2 percent.

Economic data on Wednesday were positive.

In the US, ADP’s monthly private-sector jobs report showed an increase of 749,000 in September while another report showed pending home sales jumped 8.8 percent in August.

In China, the official manufacturing PMI rose to 51.5 in September from 51.0 in August while the Caixin/Markit PMI came in at 53.0, down slightly from 53.1 in August.

Leuthold Group's chief investment strategist Jim Paulsen told CNBC that “incredible economic momentum” will drive stocks higher in the fourth quarter.

Still, the spectre of COVID-19 remains as the UK reported more than 7,000 cases for the second day in a row and several European countries looked at tightening restrictions in an effort to contain the spread of the virus over autumn and winter.