Market Commentary: And they are back, with S&P within inches of record high close

·           A broad rally led by tech-related stocks saw the S&P 500 finish just short of its February record closing high; the index briefly surpassed its record closing level of 3,386.15 from 19 Feb, reaching as high as 3,387.89 during intraday trading.

·           The Nasdaq and Dow also rose sharply. The Dow Jones Industrial Average rose 1.0% to 27,976.8, the S&P 500 was up 1.4% to 3,380.4 while Nasdaq Composite rose 2.1%, to 11,012.2.

·           Tesla Inc shares jumped 13.1% after it announced a five-for-one stock split in an attempt to make its shares more accessible to employees and investors.

·           The prospect of declining coronavirus cases at a time when the federal government and central banks are still supporting the economy could have lifted sentiment. Federal Reserve speakers advocated the need to protect a nascent recovery. Dallas head Robert Kaplan called on officials to push harder for adherence to protective behaviours and said extending unemployment benefits is “critical” to growth.

·           Data showed US consumer prices increased more-than-expected in July, but high unemployment is likely to keep inflation under control, allowing the Federal Reserve to continue pumping money into the economy.

·           Sentiment may have lifted too after President Donald Trump said the US government will purchase 100 million doses of Moderna’s experimental coronavirus vaccine, which is currently in late-stage human trials.

·           The UK economy officially entered a recession, after gross domestic product dropped 20.4% in the second quarter of 2020, compared to the previous three months.

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Market Commentary: Winning streak snaps

·           The S&P 500 and the Dow snapped a seven-day streak of gains and fell on growing uncertainty about a stalemate in Washington over a fiscal stimulus pact.

·           US Senate Republican leader Mitch McConnell said that White House negotiators had not spoken on Tuesday with Democratic leaders in the US Congress on coronavirus aid legislation after talks broke down last week.

·           Investors have been hoping Republicans and Democrats will resolve their differences and agree on another relief programme to support about 30 million unemployed Americans, as the battle with the virus outbreak was far from over, with US cases surpassing 5 million last week.

·           The Nasdaq fell more than 1%, extending recent losses and registering its biggest daily percentage decline since 23 July, with investors continuing to shed technology-related market heavyweights in favour of value names.

·           The Dow Jones Industrial Average fell 104.53 points or 0.38% to 27,686.91, the S&P 500 lost 26.78 points, or 0.80% to 3,333.69 and the Nasdaq Composite dropped 1.69% to 10,782.82.

·           A meeting between top US and Chinese trade officials on Saturday to review the first six months of the Phase 1 trade deal is still on the cards. On the virus front, California reported a sharp jump in cases. New Zealand’s main stock gauge lost more than 2% after evidence of new coronavirus cases in the country forced fresh restrictions.

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Market Commentary: US negotiations over stimulus continue amid diplomatic tensions

·           Investors are assessing simmering tensions between the US and China, as well as progress in talks between Democrats and Republicans on negotiating a broader additional virus relief package. Value stocks, which tend to outperform growth coming out of a recession, have seen a lift in recent days.

·           The Dow Jones Industrial Average rose 1.3% to 27,791.44. The S&P 500 gained 0.27% to 3,360.47 and the Nasdaq Composite dropped 0.39%, to 10,968.36.

·           As energy and industrial sectors led gains, chipmakers led declines amid renewed tensions with China. Tech has been one of the few resilient sectors and analysts believe a pullback is not unusual. Oil gained the most in almost three weeks after Saudi Aramco said demand will continue to improve.

·           The S&P 500 is within earshot of an all-time high. Whether it breaks through that psychologically important barrier depends on how the market is able to take looming trade tensions and Washington’s antics in stride.

·           US President Donald Trump had signed executive orders on Saturday that partly restored enhanced unemployment benefits after talks between the White House and top Democrats in Congress about fresh stimulus broke down last week but it remains to be seen if his actions have any benefits. Steven Mnuchin said that Democrats' insistence on almost US$1 trillion for aid to state and local governments is "absurd," but maintained a deal is still possible.

·           Investors are also assessing simmering tensions between the US and China, as China said it will sanction 11 Americans in retaliation for similar measures imposed by the US on Friday, but the list doesn’t include any members of the Trump administration.

·           China’s industrial activity picked up in July, boosting hopes for an economic recovery and driving early gains in European stocks. In Europe, stocks advanced led by financial companies.

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Market Commentary: Stimulus hopes keeps markets buoyant

·           Markets have been incredibly resilient; there is a big fear of missing out and it is the old stalwarts, the technology leaders that keep driving markets higher. The Nasdaq ended the session above 11,000 for the first time

·           Economic data released on Thursday painted a mixed picture as US Labour Department numbers showed a first fall in jobless claims in three weeks, although a separate report showed a 54% surge in job cuts announced by employers in July. The data comes ahead of the government payrolls report today.

·           With last month's surge in infections, Friday's jobs report will probably show a slowdown in the recovery — or worse. Non-farm payrolls are forecast to show a 1.5 million increase in July, less than a third of June's 4.8 million, with the jobless rate ticking down to 10.5% from 11.1%.

·           The Dow Jones Industrial Average rose 185.46 points or 0.68%, to 27,386.98, the S&P 500 gained 21.39 points or 0.64%, to 3,349.16 and the Nasdaq Composite rose 1%, to 11,108.07.

·           Results earnings season is in its final stretch, and with better-than-feared second-quarter earnings, investors are looking to the next fiscal aid package to further cope with fallout from the Covid-19 pandemic. But Senate Majority Leader Mitch McConnell said Republicans and Democrats remained far apart over what to include in another wave of relief.

·           Donald Trump has vowed to take unilateral action if the White House and Democrats are unable to reach a stimulus deal by Friday. The president said he would issue executive orders either today or Saturday on extending unemployment benefits and imposing a payroll tax holiday.

·           China's July trade numbers may paint a mixed picture of the world's economic rebound. Consensus is for exports to drop 0.7% on year — compared with a 0.5% gain in June — and for imports to advance 2.5%, with an assist from higher commodity prices. The surplus may narrow to $42.55 billion.

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Market Commentary: Markets remain robust despite grim jobs data

·           Investors have been pushing stocks higher in recent days as pressure grows on Republicans and Democrats to resolve differences over a new US virus relief package, especially with jobs data painting a grim picture. Gains in precious metals suggest investors are nervous about the outlook for the global economy and seeking a hedge.

·           US economic data was mixed, with payroll gains slowing sharply in July, suggesting the pickup in coronavirus cases is putting the brakes on the job market. Meanwhile, service industries grew in July at the fastest pace since February 2019.

·           Many economists expect last week’s expiration of US$600 in enhanced weekly unemployment benefits to lead to a sharp drop-off in household spending and a setback for the US economy’s near-term recovery, even if the lapse turns out to be temporary.

·           Cyclical sectors including industrials, materials and financials contributed the most to the market’s gains and allowed the Dow industrials (up 1.39%) and S&P 500 (up 0.64%) to outpace the Nasdaq Composite (up 0.52%).

·           Still, the Nasdaq did manage to clinch yet another record close for the year and at one point traded above 11,000 for the first time. The major market indices are having a robust week, up 2.9%, 1.7% and 2.3%, respectively, since Friday’s close.

·           Geopolitics remain in play, as Mike Pompeo signalled the American campaign against China's tech firms would escalate beyond TikTok as he promoted a "clean network" initiative. The secretary of state said the US wants to see untrusted Chinese apps removed from app stores, called for companies to limit their apps from phones made by Huawei and for ending the use of Chinese cloud providers.

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Market Commentary: US markets higher on stimulus hopes

·           Investors are closely monitoring news for a new virus relief package, as negotiators seek to shrink the gap that remains between Republicans and Democrats. A rally in tech-related stocks and trillions of dollars in monetary and fiscal stimulus have lifted the S&P 500 to within about 3% of February’s record high.

·           The Dow Jones Industrial Average rose 0.62% to end at 26,828.47 points, while the S&P 500 gained 0.36% to 3,306.51. The Nasdaq Composite climbed 0.35% to 10,941.17. Oil dipped after climbing to its highest in nearly two weeks as an explosion in Beirut stoked fears over instability in the region.

·           Senior US and Chinese officials are planning to assess the nations’ trade agreement around the middle of the month against a backdrop of rising tensions between the countries.

·           On the virus front, California reported the fewest new coronavirus cases since June, while Florida and Arizona also saw their infections slow, signalling an easing in some of the US states hardest-hit by the pandemic in recent weeks. In Europe, Germany, Poland and the Netherlands recorded increases in new cases.

·           A slew of economic news out of the US could move stocks. Private payrolls data from ADP will be watched if companies continued to bring back workers from their pandemic furlough in July. Economists polled by Dow Jones are expecting 1 million private workers were added in July, down from the 2.369 million added in June.

·           The final read on July Services PMI and the ISM nonmanufacturing survey is also anticipated.

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Market Commentary: Nasdaq hits record high close

·           Investors are entering August looking past the disturbing rate of coronavirus infections and scattered moves to return major cities to lockdowns. Tech shares led the way, amid positive economic data and after the White House was said to be considering acting on its own to boost unemployment benefits.

·           The Dow Jones Industrial Average rose 0.89% to end at 26,664.4 points, while the S&P 500 gained 0.72% to 3,294.61. The Nasdaq Composite climbed 1.47% to 10,902.80, beating its previous record high close on July 20.

·           The Nasdaq 100 reached a record as traders sought out companies poised to do best in a stay-at-home economy. Apple Inc set an all-time high and Microsoft Corp gained as it tried to salvage a deal for the US operations of TikTok.

·           There was a pickup in M&A activity and analysts say this is a positive sign as it means CEOs are more confident about the future.

·           The US Dollar bounced higher following its worst July in a decade and Treasuries fell across the yield curve as data showed US manufacturing expanded in July at the fastest pace since March 2019.

·           The White House was said to be exploring whether President Donald Trump can act on his own to extend enhanced unemployment benefits.

·           Europe’s benchmark gauge rose the most in two weeks after the euro area’s first manufacturing expansion in one-and-a-half years.

·           Equities rose in Japan and China, where mainland-listed technology stocks surged on expectations of support from Beijing in response to US moves against Chinese-owned software companies.

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Market Commentary: Fed to keep its interest rate target range

·           At the end of its two-day policy meeting, the US Federal Reserve said it will keep its interest rate target range until it is confident the economy has weathered the coronavirus pandemic and is on track for maximum employment. Markets welcomed the news and extended gains, as this likely means that that monetary stimulus is going to remain accommodative for the foreseeable future.

·           The Dow Jones Industrial Average rose 160.29 points or 0.61% to 26,539.57, the S&P 500 gained 40 points, or 1.24% to 3,258.44 and the Nasdaq Composite added 1.35% to 10,542.94.

·           Chairman Jerome Powell said there are signs the increase in infections is starting to weigh on activity while noting that the path forward for the economy is “extraordinarily uncertain.”

·           Recent data point to a possible slowdown in business and hiring as several US states reimpose restrictions after a spike in Covid-19 infections, while deaths in the country caused by the disease surpassed 150,000 on Wednesday.

·           The US economy probably contracted a stunning 34.5% in the second quarter, according to consensus, after the previous 5.0% slide. Personal consumption is also seen falling 34.5%. Meanwhile, another 1.44 million Americans may have filed for unemployment claims, up from the prior week's 1.42 million, with continuing claims likely hovering around 16.3 million.

·           Amazon.com Inc, Facebook Inc, Apple Inc and Alphabet’s Google were among the biggest boosts for Nasdaq even as the chief executives of all 4 firms faced jabs from lawmakers at a congressional hearing on antitrust issues. Lawmakers told the CEOs that the US technology giants have too much power and control over digital markets and are harming workers, consumers and small businesses across the economy.

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