Monday, 30 November 2020

S&P 500 hits record as COVID-19 vaccines beckon

The S&P 500 rose 2.3 percent last week, closing on Friday at a record high.

Investors shrugged off the continuing rise in COVID-19 cases in the US. As of Saturday evening, more than 138,000 new cases and 1,100 deaths had been reported, according to Johns Hopkins University.

Instead, investors focused on the hope that vaccines will be rolled out soon.

Indeed, on Friday, the Federal Aviation Administration announced that it has supported the “first mass air shipment” of a COVID-19 vaccine.

Meanwhile, investors also can look forward to the historically-positive year-end period for the stock market.

Capital Wealth Planning’s Jeff Saut told CNBC last week that the S&P 500 could hit 4,000 before year-end.

“Earnings are going to continue to come in better than most people think,” he said.

Saturday, 28 November 2020

Markets rise, environment for risk assets “getting better and better”

Markets rose on Friday.

The S&P 500 rose 0.3 percent to a record high, the STOXX Europe 600 rose 0.4 percent and the Shanghai Composite rose 1.1 percent.

With several COVID-19 vaccines expected to be rolled out over the next few months, Bill Northey, senior investment director at US Bank Wealth Management, said that “that is going to allow pent-up economic activity to return”.

Mike Zigmont, head of trading and research at Harvest Volatility Management, said that the “environment for risk assets has been getting better and better”.

Adding to the positive mood, China reported on Friday that industrial profits surged 28.2 percent year-on-year in October.

Friday, 27 November 2020

Markets mixed, “death rate will double” in the US after Thanksgiving

Markets were mixed on Thursday.

The STOXX Europe 600 fell 0.1 percent but the Nikkei 225 rose 0.9 percent. The US stock market was closed for a holiday.

Connor Campbell, a financial analyst at Spreadex, said that “the wider market is still in an uptrend” but acknowledged that “there are plenty of negative headlines out there for investors to wait and think of the near-term effects”.

Indeed, COVID-19 remains on the minds of many as Chancellor Angela Merkel said that Germany will face restrictions on public life for the foreseeable future while UK health minister Matt Hancock announced that several parts of England will be forced to live under the toughest category of COVID-19 restrictions when a national lockdown ends on 2 December.

In the US, the number of Covid-19 patients in hospitals hit a record for the 17th straight day Thursday.

And with many Americans ignoring the CDC's recommendation not to travel for Thanksgiving, experts expect infections to surge further.

“I expect that the daily death rate will double in the next 10 days,” said Dr Jonathan Reiner, a professor of medicine at George Washington University. “We'll be seeing close to 4,000 deaths a day.”

Thursday, 26 November 2020

Markets fall, positive news “discounted”

Markets fell on Wednesday.

The S&P 500 fell 0.2 percent, the STOXX Europe 600 dipped 0.1 percent and the Shanghai Composite fell 1.2 percent.

“A lot of future positive news regarding the economy and the virus has already been discounted,” said Peter Cardillo, chief market economist at Spartan Capital Securities.

There was some relief on the COVID-19 front, with the World Health Organization reporting that the global acceleration in case incidence has slowed down over the past week, with around 4 million new cases recorded. However, death rates continued to increase, with more than 67,000 new deaths reported across the world.

The number of new cases reported in the European region, which had the highest number of cases globally, declined by 6 percent to 1.77 million in the past week after a decline of 10 percent in the previous week. Some countries are already considering easing restrictions, at least over the Christmas period.

Still, Ursula von der Leyen, president of the European Commission, warned on Wednesday: “Relaxing too fast and too much is a risk for a third wave after Christmas.”

Meanwhile, though, the US reported over 1.1 new million cases, a 14 percent increase from the previous week, while deaths increased by 23 percent with 9,918.

Wednesday, 25 November 2020

US stocks hit record highs on hopes for COVID-19 vaccine

Markets rose on Tuesday.

The S&P 500 jumped 1.6 percent to a record high, the STOXX Europe 600 rose 0.9 percent and the Nikkei 225 surged 2.5 percent to its highest level since 1991.

Oil rose, with US crude up 4.3 percent and Brent up 4.0 percent.

Concerns over the COVID-19 pandemic receded somewhat amid encouraging news that vaccines will be available soon.

“The possibility of having a vaccine next year increases the odds that we’re going to see demand return in the new year,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.

Tuesday, 24 November 2020

Markets mixed, await COVID-19 vaccines

Markets were mixed on Monday.

The S&P 500 rose 0.6 percent and the Shanghai Composite rose 1.1 percent but the STOXX Europe 600 slipped 0.2 percent.

Adam Crisafulli of Vital Knowledge suggested that optimism over the potential impending availability of three vaccines for COVID-19 “is more than offsetting the very grim near-term transmission/mitigation landscape”.

Bert Colijn, senior economist for the euro zone at ING, said that “some form of lockdown in December will continue to depress economic output before things actually start getting better”.

Monday, 23 November 2020

Stocks fall, government debt rises

The S&P 500 fell 0.8 percent last week, its first weekly decline in three weeks.

The surge in COVID-19 cases continued to be a concern for investors.

The US reported more than 3 million new cases between November 1 and 22. Hospitalisations for COVID-19 hit record highs for 12 consecutive days to Saturday.

The US has been slow to implement restrictions to slow the spread of the virus but even Europe’s response to the pandemic has been criticised by the World Health Organization for being “incomplete”.

“They missed building up the necessary infrastructure during the summer months, after they brought the first wave under the control,” said the WHO’s David Nabarro. “Now we have the second wave. If they don’t build the necessary infrastructure, we’ll have a third wave early next year.”

Also missed during better times have been government debt reduction. Now, with the pandemic, debt has been escalating among developed countries as they implement fiscal stimulus to support the economy.

“No government is making hay while the sun shines. In other words, when growth has been strong, governments have not cut down their debt levels. So they’re going higher and higher,” said Sonja Gibbs, the Institute for International Finance’s managing director of global policy initiatives, who warned of increasing dangers for investors who invest in government bonds.

Saturday, 21 November 2020

Markets mixed, await vaccines amid spiking COVID-19 cases

Markets were mixed on Friday.

The S&P 500 fell 0.7 percent but the STOXX Europe 600 rose 0.5 percent.

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

Aaron Clark, portfolio manager at GW&K Investment Management, said that the market is wrestling with spiking COVID-19 cases and the resulting shutdown measures.

However, Brent Schutte, chief investment strategist for Northwestern Mutual Wealth Management, said that “any market downside is going to be supported by the reality that you do have very effective vaccines that are going to be available in the not-so-distant future”.

Friday, 20 November 2020

Markets mixed as COVID-19 vaccine hopes give way to restriction concerns

Markets were mixed on Thursday.

The S&P 500 rose 0.4 percent but the STOXX Europe 600 fell 0.8 percent.

Earlier in Asia, the Shanghai Composite rose 0.5 percent but the Nikkei 225 fell 0.4 percent.

“You see the market really kind of wanting to move in one direction, and then I think the vaccine news was certainly a catalyst to accelerate that a little bit,” said Jeff Mills, chief investment officer at Bryn Mawr Trust.

Still, the near-term economic impact of the COVID-19 pandemic continued to worry some investors.

“We are now facing the biggest number of economic restrictions since the spring, and that will weigh on economic growth and, potentially, earnings,” wrote Tom Essaye, founder of The Sevens Report.

“With infection and hospitalisation rates rising, and the risk that current lockdown restrictions either remain in place, or get extended into 2021, the probability that any economic damage will become permanent is only likely to increase,” Michael Hewson, chief market analyst at CMC Markets said in a note.

Thursday, 19 November 2020

Markets mixed, US seeing “unrelenting spread” of COVID-19

Markets were mixed on Wednesday.

The S&P 500 fell 1.2 percent but the STOXX Europe 600 rose 0.4 percent.

Earlier in Asia, the Nikkei 225 fell 0.7 percent but the Shanghai Composite rose 0.4 perecnt.

Pfizer released the final data on its vaccine candidate with BioNTech, which showed the vaccine was 95 percent effective in preventing Covid-19, better than the initial data, and fended off severe infection.

Still, the continuing surge in COVID-19 cases in the US remained a concern for investors, as deaths from the virus passed 250,000 on Wednesday.

“This is the worst rate of rise in cases that we have seen in the pandemic in the United States,” said Dr Brett Giroir, assistant secretary for health. “And, right now, there's no sign of flattening.”

Indeed, all 50 states plus Washington, DC, the US Virgin Islands and Guam reported increases in coronavirus cases on Wednesday over the past 14 days.

The White House coronavirus task force stated in its latest weekly report that there is “now aggressive, unrelenting, expanding broad community spread across the country, reaching most counties, without evidence of improvement but rather, further deterioration”.

Wednesday, 18 November 2020

Markets fall, euro zone faces double-dip recession

Markets mostly fell on Tuesday.

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

Earlier in Asia, markets were mixed. The Nikkei 225 rose 0.4 percent but the Shanghai Composite fell 0.2 percent.

“Euphoria is understandable, but unsustainable,” strategists at French bank Societe Generale wrote in a note. “The surge of COVID cases in the US and Europe’s second lockdown guarantee global economic weakness for several more months.”

Similarly, Felicity Emmett, a senior economist at ANZ, wrote in a Tuesday note that “the current virus surge is stifling near-term growth prospects”.

Indeed, a Reuters poll showed that economists think that the euro zone is on track for a double-dip recession.

Tuesday, 17 November 2020

Markets rise as another prospective COVID-19 vaccine reported

Markets rose on Monday.

The S&P 500 and the STOXX Europe 600 both rose 1.2 percent while the Nikkei 225 surged 2.1 percent.

Oil rose, with US crude rising 3.0 percent and Brent gaining 2.4 percent.

Markets were boosted after Moderna said its prospective vaccine was 94.5 percent effective in preventing COVID-19.

Still, with increasingly strict limits on social gatherings and commercial activity being announced in the US recently, Andrew Mies, chief investment officer at 6 Meridien, said: “You are definitely going to see the economy have another dip, another weak spot, and they are going to have to address that with extended unemployment because a lot of people are out of work and aren’t going to see any income coming in.”

Monday, 16 November 2020

S&P 500 and US COVID-19 set record highs

The S&P 500 rose 2.2 percent to a record high last week even as the COVID-19 pandemic continued to rampage across the US.

According to data from John Hopkins University, the US surpassed 11 million COVID-19 cases on Sunday. It set a new record-high number of patients hospitalised with the disease on Saturday.

"We are in the worst moment of this pandemic to date. The situation has never been more dire," Michigan Governor Gretchen Whitmer said on Sunday in announcing new restrictions, one of several states to do so in recent days.

Expectations for the release of a vaccine soon kept the stock market rally going though after Pfizer reported early last week that their COVID-19 vaccine was more than 90 percent effective in preventing the disease.

While a vaccine could indeed help the economy recover, experts cautioned that it may take a while for it to actually become available.

And then there is the view of Bank of America that investors should actually sell upon the vaccine’s availability.

"We are sellers-into-strength into vaccine [rollout] in coming months," it said on Friday.

Saturday, 14 November 2020

S&P 500 hits record high amid new COVID-19 restrictions

Markets were mixed on Friday.

The S&P 500 jumped 1.4 percent to close at a record high but the STOXX Europe 600 was flat and the Shanghai Composite fell 0.9 percent.

“This week’s positive vaccine news is a game-changer in our view, as it allows the market to look through the recent surge in COVID-19 cases to the impending end of the pandemic and broader reopening of the economy,” wrote Marko Kolanovic, JPMorgan’s head of macro quantitative and derivatives strategy.

Indeed, stocks rose in the US even as new restrictions are being imposed to suppress the spread of COVID-19.

“We are in a life-or-death situation, and if we don’t act right now, we cannot preserve the lives, we can’t keep saving lives, and we will absolutely crush our current health care system and infrastructure,” Governor Michelle Lujan Grisham of New Mexico said in imposing a two-week stay-at-home order.

Oregon Governor Kate Brown ordered a two-week “freeze” starting Wednesday, under which all businesses will be required to close their offices to the public and mandate work-from-home “to the greatest extent possible.”

However, with deaths from COVID-19 having climbed to about 1,000 a day on average and projected to reach nearly 439,000 by 1 Mar, Dr Michael Fine, former director of Rhode Island’s Health Department, said: “Short of very profound lockdowns, I don’t think we have a chance of slowing the spread.”

Friday, 13 November 2020

Markets fall as recovery enters “challenging” months

Markets were mostly lower on Thursday. The S&P 500 fell 1.0 percent and the STOXX Europe 600 fell 0.9 percent.

Earlier in Asia, markets were mixed. The Nikkei 225 rose 0.7 percent but the Shanghai Composite dipped 0.1 percent.

“The sell-off globally is being driven by the sharp spike in new coronavirus cases,” said Oliver Pursche, president of Bronson Meadows Capital Management.

Indeed, some economists think the US economy may already be taking a turn for the worse.

Gregory Daco, chief US economist at Oxford Economics, said that its broad index of the recovery “is reeling” after declining for four consecutive weeks.

Fed chair Jerome Powell said on Thursday that while he still sees the US recovery on a “solid path”, he acknowledged that “the next few months could be challenging”.

Thursday, 12 November 2020

Markets rise, “very cavalier” about COVID-19 risk

Markets rose on Wednesday.

The S&P 500 rose 0.8 percent, the STOXX Europe 600 rose 1.1 percent and the Nikkei 225 rose 1.8 percent.

While the latest rally in stocks was sparked by Pfizer and BioNTech’s announcement that their COVID-19 vaccine was more than 90 effective, Carl Tannenbaum, chief economist at Northern Trust, cautioned that the vaccine will not result in an “instant stimulus” to the US economy.

“On the employment front, we still have 10 million Americans that were working in January that are not working today. And those that remain unemployed are seeing a much longer track back to full employment, so they will continue to need a certain amount of support,” said Tannenbaum.

Indeed, CNBC’s Jim Cramer remains concerned about COVID-19.

“I think this market’s being very cavalier about the fact that we’re running at more than 130,000 new cases per day,” he said.

Wednesday, 11 November 2020

Markets mixed amid increased hope for economic recovery

Markets were mixed on Tuesday.

The S&P 500 dipped 0.1 percent while the STOXX Europe 600 rose 0.9 percent.

Earlier in Asia, the Nikkei 225 rose 0.3 percent but the Shanghai Composite fell 0.4 percent.

“The strong results from the Pfizer vaccine were better than most expected and means we could be opening back up sooner than expected,” said Ryan Detrick, chief market strategist at LPL Financial.

Terry Sandven, chief equity strategist at US Bank Wealth Management, said that “near term, with signs of economic improvement on the horizon, we’re going to see cyclical companies outperform”.

Tuesday, 10 November 2020

Markets rise on COVID-19 vaccine news

Markets rose on Monday.

The S&P 500 rose 1.2 percent, the STOXX Europe 600 surged 4.0 percent and the Nikkei 225 jumped 2.1 percent.

US crude oil surged 8.5 percent and Brent rose 7.5 percent.

Markets were buoyed by news that Pfizer and BioNTech reported that their COVID-19 vaccine was more than 90 percent effective in preventing the disease among those without evidence of prior infection.

Paul Craig, portfolio manager at Quilter Investors, said the news marked a “first major step back to normality”.

Indeed, it will be much-needed, as the COVID-19 pandemic rages across the US, which reported more than 770,000 new cases in the week ended 10 November, up 34 percent over the previous seven days.

Monday, 9 November 2020

Stocks rally even as COVID-19 cases rise past 50 million

The S&P 500 rose 7.3 percent last week, its biggest weekly increase since April.

Most media attention last week was on the US presidential election, which former vice president Joe Biden ultimately won.

“The market is just getting more comfortable with the outcome of a divided government, where we see a continuation of political gridlock [and] no meaningful changes on tax policy,” said Dan Eye, head of asset allocation and equity research at Fort Pitt Capital Group.

Markets largely shrugged off the potential impact of the COVID-19 pandemic last week.

That may yet turn out to be a mistake, as global infections passed 50 million on Sunday.

Europe, with about 12 million cases, is the worst affected region, with countries such as Germany, France and the UK in various degrees of lockdown.

The US, which passed 10 million cases on Sunday, is the worst affected country. It reported a record 131,420 COVID-19 cases on Saturday and president-elect Joe Biden pledged on Saturday to make tackling the pandemic a top priority.

Saturday, 7 November 2020

Markets mixed, US records “amazing” Oct job growth

Markets were mixed on Friday.

The S&P 500 was flat, the STOXX Euroe 600 fell 0.2 percent and the Nikkei 225 rose 0.9 percent.

A stronger-than-expected US jobs report failed to give US stocks much lift.

The Labor Department reported that nonfarm payrolls increased by 638,000 in October and the unemployment rate was at 6.9 percent.

“The strength of this report is really amazing in the face of rising coronavirus cases,” said Michael Arone, chief investment strategist at State Street Global Advisors.

However, some economists are worried that the strength may not be sustained.

“I think the risks are pretty high here that the economy backtracks,” said Mark Zandi, chief economist of Moody’s Analytics. “We are suffering a very significant reintensification of the virus...that’s going to start doing some damage.”

Friday, 6 November 2020

Markets rise, US faces split Congress and surging COVID-19

Markets rose on Thursday.

The S&P 500 surged 1.9 percent, the STOXX Europe 600 rose 1.1 percent and the Nikkei 225 jumped 1.7 percent.

“It looks likely that we’ll see a split Congress, which, based on history, has been the preference of the stock market,” said Lindsey Bell, chief investment strategist at Ally Invest, as the US election vote-counting dragged on on Thursday.

Also on Thursday, the Federal Reserve left monetary policy unchanged.

“We’ve gotten through the first five, six months of the expansion better than expected,” said Fed Chair Jerome Powell at a news conference after the two-day policy meeting. “But we have to be humble where we are relative to this disease. It has not gone away.”

Indeed, the US reported a record 114,876 new COVID-19 cases on Thursday. Hospitalisations for COVID-19 reached all-time highs in 16 states on Wednesday.

Thursday, 5 November 2020

Markets rise as US election remains undecided

Markets rose on Wednesday.

The S&P 500 surged 2.2 percent and the STOXX Europe 600 jumped 2.1 percent.

While the US presidential election remained undecided and the possibility of a contested election exists, Tom Essaye, founder of the Sevens Report, said that “we do not see it as a bearish gamechanger”.

Wednesday, 4 November 2020

Markets rise ahead of US presidential election

Markets rose on Tuesday.

The S&P 500 jumped 1.8 percent, the STOXX Europe 600 surged 2.3 percent and the Shanghai Composite rose 1.4 percent.

Markets rose as Americans head for the US presidential election, with former Vice President Joe Biden holding a lead in national polling over President Donald Trump.

“I think that no matter who wins, you have a quick dip and you have to buy,” said CNBC's Jim Cramer.

Similarly, Jim Paulsen, chief investment strategist at the Leuthold Group, said that “after almost a 10% decline in the last month, buying on the dip is back”.

Earlier in the day, the Reserve Bank of Australia reduced its cash rate target to 0.1 percent.

“The cash rate is now really as close to negative as it can be,” said Paul Bloxham, chief economist for Australia, New Zealand and global commodities at HSBC.

Tuesday, 3 November 2020

Markets rise amid positive manufacturing PMI data

Markets rose on Monday.

The S&P 500 rose 1.2 percent, the STOXX Europe 600 jumped 1.6 percent and the Nikkei 225 gained 1.4 percent.

“Even though we’re worried that there could still be one more wave down if we get another big influx of uncertainty, we think the stock market is now setting up nicely for a nice net advance over the next two months or so,” said Matt Maley, chief market strategist at Miller Tabak.

Markets were boosted by positive manufacturing PMI data on Monday.

The Caixin/Markit China manufacturing PMI rose to 53.6 in October from 53.0 in September.

The IHS Markit eurozone manufacturing PMI rose to 54.8 in October from 53.7 in September.

In the US, the ISM manufacturing PMI rose to 59.3 in October from 55.4 in September.

However, with the COVID-19 pandemic still raging around much of the world, Gus Faucher, chief economist at PNC Financial, warned that “the path forward will be more difficult as the economy continues to cope with the pandemic”.

Monday, 2 November 2020

Markets fall amid COVID-19 surge, lockdowns and record hospitalisations

Markets fell last week.

The S&P 500 and the STOXX Europe 600 both fell 5.6 percent.

Oil fell over 10 percent.

The rising number of COVID-19 cases weighed down markets last week and may continue to do so this week.

In Europe, new cases doubled over the past five weeks and propelled the total number of infections to over 10 million on Sunday.

France, Germany and the United Kingdom have announced nationwide lockdowns for at least the next month.

In contrast, in the US, which is seeing a continuing rise in COVID-19 cases with Midwestern states experiencing record hospitalisations, nationwide action to limit the spread has been limited of late.

“We have hospitalizations going through the roof,” said Wisconsin Governor Tony Evers on Sunday. “We absolutely need somebody that understands that this is an issue, it’s a thing. People are dying.”