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Traders May Continue To Pick Up Stocks at Reduced Levels
US Market
The major U.S. index futures are pointing to a higher open on Wednesday, with stocks likely to extend the upward move seen over the course of the previous session.
The upward momentum on Wall Street comes as traders may look to continue to pick up stocks at relatively reduced levels following recent weakness.
Buying interest may also be generated in reaction to comments from President Donald Trump indicating the U.S. would not follow the U.K.’s lead and implement a second round of lockdowns.
“The U.K. just shut down again. They just announced that they’re going to do a shutdown, and we’re not going to be doing that,” Trump told Fox 2 Detroit on Tuesday. “We understand the disease, we understand how to handle it.”
In other coronavirus-related news, Johnson & Johnson (JNJ) announced it has begun a phase 3 trial of its coronavirus vaccine candidate.
Despite worries about a surge in coronavirus cases and fresh lockdown measures in parts of Europe as well as continued uncertainty about a new relief package in the U.S., stocks closed on a firm note on Wall Street on Tuesday.
It was a weak start for the major indices, with stocks staying largely sluggish in cautious trading, but key shares from the technology space recovered around mid-morning and kept moving higher as the day progressed.
The broad market was a bit subdued until an hour past noon but started edging higher thereafter.
The Dow ended with a gain of 140.48 points or 0.5 percent at 27,288.18, about 300 points off the session’s low. The S&P 500 jumped 34.51 points or 1.1 percent to 3,315.57, while the Nasdaq surged up 184.84 points or 1.7 percent to 10,963.64.
The strength on Wall Street came after Federal Reserve Chair Jerome Powell said the central bank remains “committed to using our tools to do what we can, for as long as it takes, to ensure that the recovery will be as strong as possible.”
“A full recovery is likely to come only when people are confident that it is safe to reengage in a broad range of activities,” Powell said in prepared remarks before the House Financial Services Committee.
He added, “The path forward will depend on keeping the virus under control, and on policy actions taken at all levels of government.”
U.S. Treasury Secretary Steven Mnuchin said the White House continues to seek an agreement with both parties in Congress on another fiscal relief package.
Nike (NKE) shares soared nearly 15 percent. Microsoft (MSFT) surged up about 2.3 percent. Visa (V), Walt Disney (DIS), Apple (AAPL), Caterpillar (CAT) and Coca-Cola (KO) also closed notably higher.
A report released by the National Association of Realtors said existing home sales in the U.S. climbed to their highest level in nearly fourteen years in the month of August, jumping 2.4 percent to an annual rate of 6.000 million. Sales were up 24.7 percent a month earlier. The continued increase in sales matched economist estimates.
U.S. Economic Reports
Cleveland Federal Reserve President Loretta Mester is scheduled to speak at the 20th Anniversary Chicago Payments Symposium on “Payments and the Pandemic” at 9 am ET.
At 10 am ET, Federal Reserve Chairman Jerome Powell is due to testify before the House of Representatives Select Subcommittee on the coronavirus crisis.
The Energy Information Administration is scheduled to release its report on oil inventories in the week ended September 18th at 10:30 am ET
Crude oil inventories are expected to decrease by 2.3 million barrels after falling by 4.4 million barrels in the previous week.
At 11 am ET, Chicago Federal Reserve President Charles Evans is due to speak in a MNI Market News Q&A entitled “Outlook for the U.S. Economy.”
Boston Federal Reserve President Eric Rosengren is scheduled to speak at the Boston Economic Club on the U.S. economy and current conditions at 12 pm ET.
At 1 pm ET, Atlanta Federal Reserve President Raphael Bostic is due to speak about the economic challenges and opportunities for rural communities at a Hale County Chamber of Commerce webcast even.
Minneapolis Federal Reserve President Neel Kashkari is also scheduled to speak about healthcare at a Harvard of School of Public Health webcast event at 1 pm ET.
Also at 1 pm ET, the Treasury Department is due to announce the results of its auction of $53 billion worth of five-year notes.
San Francisco Federal Reserve President Mary Daly is scheduled to speak about the labor force implications of Covid-19 at a “Connecting Communities” webinar held by the Federal Reserve at 3 pm ET.
Stocks in Focus
Shares of Nike (NKE) are moving sharply higher in pre-market trading after the athletic apparel and footwear maker reported fiscal first quarter results that exceeded analyst estimates on both the top and bottom lines.
Food producer General Mills (GIS) may also move to the upside after reporting better than expected fiscal first quarter results.
On the other hand, shares of Stitch Fix (SFIX) are likely to come under pressure after the online clothing styling company reported a wider than expected fiscal fourth quarter loss.
Europe
European stocks have moved sharply higher on Wednesday, extending gains from the previous session after Federal Reserve Chair Jerome Powell reiterated the Fed’s commitment to use all of its monetary policy tools for as long as necessary to support the economy.
Investors have shrugged off flash survey data from IHS Markit showing that the euro area private sector stagnated in September. The composite output index declined to 50.1 in September from 51.9 in August. Economists had forecast the reading to drop to 51.7.
Manufacturing output growth accelerated in September to the fastest since February 2018, while services recorded the largest contraction of output since May.
In the U.K., the IHS Markit/CIPS flash composite Purchasing Managers’ Index (PMI) dropped to a three-month low of 55.7 after hitting a six-year high of 59.1 in the previous month.
While the U.K.’s FTSE 100 Index has surged up by 2.1 percent, the French CAC 40 Index is up by 1.5 percent and the German DAX Index is up by 1.4 percent.
Austrian sensor maker ams has rallied after the company said it had entered into a domination and profit and loss transfer agreement with German firm Osram Licht. Shares of the latter have also spiked.
Siemens AG has also moved higher after extending its strategic partnership with Atos for five years in the areas of services modernization and digitalization, data driven digital, cloud transformation and cybersecurity.
Peugeot shares have also jumped after the automaker said it would buy back 10 million of its own shares from Dongfeng Motors.
Diploma shares have also soared in London after the technical products and services provider said it had agreed to buy Windy City Wire Cable and Technology Products for £357 million.
SSP Group has also moved sharply higher after the catering company said sales have recovered since stores reopened.
Halma has also advanced. The hazard detection company stated that it has delivered a resilient performance in line with the Board’s expectations for the period from 1 April 2020 to date.
Asia
Asian stocks rose broadly on Wednesday, tracking overnight gains in the U.S. and European markets after Fed Chair Jerome Powell said the U.S. central bank is committed to helping the economy.
Chinese stocks finished slightly higher, with healthcare stocks gaining ground after the state planner said the country would speed up development of vaccine innovation, diagnostic, testing reagents and antibody drugs.
The benchmark Shanghai Composite Index edged up 5.41 points, or 0.2 percent, to 3,279.71. Hong Kong’s Hang Seng Index inched up 0.1 percent to 23,742.51.
Japanese shares ended little changed with a negative bias as traders returned to their desks after a long weekend. The Nikkei 225 Index slipped 13.81 points, or 0.1 percent, to close at 23,346.49 as investors fretted over rising coronavirus infections in Europe and a delay in U.S. fiscal stimulus. The broader Topix ended down 0.1 percent at 1,644.25.
Market heavyweight SoftBank Group tumbled 2.6 percent. Exporters ended broadly lower despite a weaker yen. Sony shed 1.4 percent, Panasonic lost 3.7 percent and Honda Motor gave up 2.8 percent. Suzuki Motor slipped 3.6 percent and Nissan Motor declined 3.2 percent.
Fujifilm Holdings soared 4.9 percent after the company completed delayed clinical tests of Avigan, a potential treatment for Covid-19. Home furnishing store operator Shimachu jumped 17.4 percent on reports rival DCM Holdings was considering a tender offer for the firm.
In economic news, the latest survey from Jibun Bank revealed that the manufacturing sector in Japan continued to contract in September, albeit at a slightly slower pace, with a manufacturing PMI score of 47.3.
Australian markets rebounded from three-month lows as authorities eased some border restrictions amid improved coronavirus indicators in both NSW and Victoria. Investors shrugged off data showing that Australian retail sales fell 4.2 percent in August from the month earlier.
The benchmark S&P/ASX 200 Index jumped 139.80 points, or 2.4 percent, to 5,923.90, while the broader All Ordinaries Index ended up 137.80 points, or 2.3 percent, at 6,111.30.
The big four banks rallied 2-3 percent amid predictions of an RBI interest rate easing next month. Healthcare stocks advanced, with CSL and Cochlear rising nearly 4 percent each.
Woodside Petroleum, Santos, Oil Search and Origin Energy rose 1-2 percent after crude oil prices rebounded overnight. In the tech sector, Afterpay climbed 2.9 percent and Appen advanced 1.9 percent.
Meanwhile, gold miners ended broadly lower after bullion prices declined for a second straight session overnight.
Seoul stocks rose slightly to snap a two-day losing streak. The benchmark Kospi edged up 0.65 point, or less than a tenth of a percent, to close at 2,333.24 after falling as much as 2.4 percent in the previous session.
Market bellwether Samsung Electronics rose 0.7 percent, No. 2 chipmaker SK Hynix added 2.8 percent and internet portal giant Naver rallied 4.2 percent.
Rechargeable battery maker Samsung SDI declined 2.2 percent after Tesla founder Elon Musk announced technology that he says will make Tesla batteries cheaper and more powerful.
Commodities
Crude oil futures are rising $0.20 to $40 a barrel after climbing $0.26 to $39.80 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,886, down $21.60 compared to the previous session’s close of $1,907.60. On Tuesday, gold fell $3.
On the currency front, the U.S. dollar is trading at 105.16 yen compared to the 104.93 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1691 compared to yesterday’s $1.1708.
