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Futures Pointing to Continued Strength on Wall Streety
US Market
The major U.S. index futures are currently pointing to a higher opening on Monday, with stocks likely to extend the strong upward move seen in the previous session.
The upward momentum on Wall Street comes following a rally seen in the European markets, as traders pick up stocks at relatively reduced levels.
The markets seem likely to shrug off recent concerns about a surge in coronavirus cases and uncertainty about the U.S. presidential election.
Following the roller coast ride seen on Thursday, stocks initially showed a lack of direction during trading on Friday. Buying interest emerged over the course of the session, however, leading to a sharply higher close by the major averages.
The major averages all closed firmly in positive territory, although the tech-heavy Nasdaq outperformed its counterparts. The Nasdaq soared 241.30 points or 2.3 percent to 10,913.56, while the Dow jumped 358.52 points or 1.3 percent to 27,173.96 and the S&P 500 surged up 51.87 points or 1.6 percent to 3,298.46.
For the week, the major averages turned in a mixed performance. While the Nasdaq climbed by 1.1 percent, the Dow tumbled by 1.7 percent and the S&P 500 fell by 0.6 percent.
The strength that emerged on Wall Street came as technology stocks moved sharply higher, once again attempting to rebound from recent weakness.
Big-name tech stocks like Apple (AAPL), Amazon (AMZN) and Microsoft (MSFT) posted significant gains on the day.
The advance by Microsoft reflected substantial strength in the software sector, with the Dow Jones U.S. Software Index surging up by 2.6 percent.
Cruise line operators Norwegian Cruise Line (NCLH), Carnival (CCL), and Royal Caribbean (RCL) also saw considerable strength on the day after Barclays upgraded its rating on the stocks to Overweight from Equal Weight.
Notable strength also emerged among biotechnology and healthcare stocks, with the NYSE Arca Biotechnology Index and the Dow Jones U.S. Healthcare Index both climbing by 1.8 percent.
Within the biotech sector, Novavax (NVAX) posted a standout gain after announcing it has initiated a Phase 3 trial of its COVID-19 vaccine candidate.
Commercial real estate, airline and retail stocks also showed strong moves to the upside on the day, while oil service stocks bucked the uptrend amid a modest decrease by the price of crude oil.
Traders largely shrugged off a report from the Commerce Department showing a much smaller than expected increase in durable goods orders in the month of August.
The Commerce Department said durable goods orders rose by 0.4 percent in August after soaring by an upwardly revised 11.7 percent in July.
Economists had expected durable goods orders to surge up by 1.5 percent compared to the 11.4 percent spike that had been reported for the previous month.
Excluding a 0.5 percent increase in orders for transportation equipment, durable goods orders still climbed by 0.4 percent in August following a 3.2 jump in July. Ex-transportation orders were expected to shoot up by 1.5 percent.
Meanwhile, the report said orders for non-defense capital goods excluding aircraft, a reading on business spending, advanced by 1.8 percent in August after jumping by an upwardly revised 2.5 percent in July.
Traders also kept an eye on developments in Washington amid reports House Democrats plan to unveil a new $2.4 trillion coronavirus relief bill.
The price tag for the bill is $1 trillion less than a stimulus package the House passed back in May but may still be too high for Republicans.
U.S. Economic Reports
No major U.S. economic data is scheduled to be released today, although the monthly jobs report is likely to attract attention later this week along with reports on consumer confidence, pending home sales, personal income and spending and manufacturing activity.
Europe
European stocks have moved sharply higher on Monday as a late Wall Street rally on Friday coupled with strong industrial profits data from China has helped offset concerns about rising tensions between Beijing and Washington.
Profits at China’s industrial firms grew for the fourth straight month in August, buoyed in part by a rebound in commodities prices and equipment manufacturing, official data showed on Sunday.
While the German DAX Index has soared by 3.2 percent, the French CAC 40 Index is up by 2.5 percent and the U.K.’s FTSE 100 Index is up by 1.9 percent.
Brexit trade talks are set to resume this week, with negotiators expected to discuss law enforcement and transport.
Banks led the surge, with Commerzbank, Deutsche Bank and Credit Agricole all posting substantial gains on the day.
Automakers BMW, Daimler, Volkswagen, Renault and Peugeot have also moved notably higher as the dollar holds near a two-month peak against a basket of currencies ahead of a barrage of economic data due this week, and the U.S. presidential debate on Tuesday.
ArcelorMittal SA has jumped after Cleveland-Cliffs Inc. entered into a definitive agreement to buy the company’s U.S. operations.
HSBC Holdings shares have also surged after the banking giant’s biggest shareholder raised its stake in the firm late last week.
Diageo has also moved sharply higher. The world’s largest spirits maker said it has made a good start to fiscal 2021, with sequential improvement in its performance across all regions.
LPKF Laser & Electronics AG has also spiked after the electronics manufacturing company said it has signed a framework agreement with a manufacturer of thin-film solar modules.
Meanwhile, betting and gaming company William Hill has plunged. U.S-based gaming-entertainment company Caesars Entertainment, Inc. (CZR) said it is in advanced discussions concerning a possible cash offer for the British company.
Asia
Asian stocks rose broadly on Monday, though gains were tempered by concerns over rising coronavirus cases and escalating tensions between Washington and Beijing.
A cautious undertone prevailed as U.S. President Donald Trump and former vice-president Joe Biden prepare to square off in their first pre-election debate on Tuesday.
Chinese shares finished marginally lower despite the latest industrial profits data pointing to a continued recovery in the world’s second-largest economy.
Hong Kong’s Hang Seng index gained 240.63 points, or 1 percent, to finish at 23,476.05. China’s biggest chipmaker Semiconductor Manufacturing International Corp lost 3.9 percent after Washington reportedly ordered U.S. companies to seek permission before selling their technologies to the company, marking the latest salvo in the battle for tech dominance between the superpowers.
Japanese shares rose despite rising U.S.-China tensions. The Nikkei 225 Index jumped 307 points, or 1.3 percent, to 23,511.62, while the broader Topix closed 1.7 percent higher at 1,661.93. Market heavyweight SoftBank Group surged up 2.9 percent and Fast Retailing added 1 percent.
Toshiba Corp. shares tumbled 3.2 percent after Kioxia Holdings Corp., the world’s second-largest flash memory chipmaker, said it would postpone plans for an initial public offering. Tokyo Electron and Advantest ended down around 1.8 percent each.
Australian markets swung between gains and losses before finishing modestly lower despite some positive news on the coronavirus front.
Victoria, the country’s second-most populous state and the epicenter of the Covid-19 outbreak, announced plans to ease social distancing restrictions after the state recorded its lowest number of new infections in more than three months.
The benchmark S&P/ASX 200 dropped 12.60 points, or 0.2 percent, to 5,952.30, while the broader All Ordinaries index ended down 5.60 points at 6,134.90.
The big four banks fell between 0.8 percent and 1.3 percent on bets the Reserve Bank may cut interest rates next week. Mining heavyweights BHP and Rio Tinto ended down 1.3 percent and 1.5 percent, respectively.
Airline stocks gained ground, with Qantas surging 6.4 percent after the federal government said it would extend subsidies for airlines operating flights on key domestic and regional routes. Tech stocks also rose broadly, with Afterpay climbing 5.1 percent.
Gold miners Evolution Mining, Newcrest and Northern Star Resources rallied 1-3 percent despite gold prices hitting two-month lows on Friday.
Seoul stocks posted strong gains as investors sought bargains following strong advances in U.S. tech giants, such as Apple, Microsoft and Tesla on Friday. The benchmark Kospi jumped 29.29 points, or 1.3 percent, to close at 2,308.08.
Internet portal giant Naver rose 1.2 percent and its rival Kakao spiked 5 percent. Hyundai Motor, the country’s largest automaker, soared 3.2 percent and leading pharmaceutical firm Samsung Biologics advanced 1.5 percent.
Commodities
Crude oil futures are rising $0.21 to $40.46 a barrel after edging down $0.06 to $40.25 a barrel last Friday. Meanwhile, after sliding $10.60 to $1,866.30 an ounce in the previous session, gold futures are climbing $7.20 to $1,873.50 an ounce.
On the currency front, the U.S. dollar is trading at 105.46 yen versus the 105.58 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1674 compared to last Friday’s $1.1631.
