U.S. Stock Futures Edge Up to Start the Week
August 10 2020 - 9:31AM
Dow Jones News
By Anna Isaac
U.S. stock futures were muted Monday as investors assessed the
slowing pace of new coronavirus infections, potential complications
surrounding fresh federal stimulus spending plans and escalating
tensions with China.
Futures tied to the S&P 500 edged up 0.1%, following a week
in which the benchmark index advanced 2.5%. Overseas, the
pan-continental Stoxx Europe 600 ticked up 0.4%. Most major Asian
equity benchmarks rose by the close of trading, except for Hong
Kong.
Investors are attempting to gauge whether steps taken by
President Trump over the weekend to offer aid to American
households will go into effect despite challenges from lawmakers.
Questions have also risen over whether those measures can
effectively alleviate the economic fallout of the coronavirus
pandemic and lockdown measures.
Mr. Trump on Saturday directed the federal government to provide
$300 a week in additional payments to the unemployed. That was one
of four executive orders aimed at extending relief spending after
the White House and lawmakers on either side of the aisle in
Congress failed to reach an agreement on a broader stimulus
package. The president's directives are already facing criticism
for not offering sufficient aid, and for potentially breaching
congressional spending authority.
"The legal basis for Trump to do much here with executive orders
is shaky. He won't get far," said Holger Schmieding, chief
economist at Berenberg Bank. Still, with the coming November
elections, politicians are likely to work out a deal that offers
aid to votes, he said. "It's highly likely to have a deal this week
that extends support to the end of the year," Mr. Schmieding
said.
The U.S. also reported its lowest number of new coronavirus
cases in nearly a week, as new infections in some parts of the
country trended down. Still, the country surpassed five million
confirmed cases, with 13 states seeing an uptick in the number of
new infections. Economists pointed to the slowing new case numbers
as a signal that moderate measures might make it possible to
contain the virus, without again crimping economic activity
severely.
Market sentiment was briefly knocked by the Chinese foreign
ministry's comments that it will impose fresh sanctions against
several senators including Ted Cruz and Marco Rubio over Hong Kong
issues. That would mark the latest barb exchanged between the two
countries with relations deteriorating in recent months.
"I'm not surprised we're seeing yo-yo like moves at the moment
reflecting short-term developments like the sanctions," said Ella
Hoxha, senior investment manager at Pictet Asset Management.
The outcome from talks scheduled between top U.S. and Chinese
officials on Aug. 15 about the phase-one trade deal are viewed as
crucial by investors, she said. "That's more important for markets
than the sanctions, which seem much more of a tit-for-tat
diplomatic spat rather than something with deep economic
implications."
Ahead of the opening bell in New York, shares in Twitter rose
1.9%. The social-media company has had preliminary talks about a
potential combination with the popular video-sharing app TikTok in
the U.S., The Wall Street Journal reported Saturday.
Shares in Simon Property Group rose 5% in off-hours trading. The
largest mall owner in the U.S. has been in talks with Amazon.com to
take over space left by ailing department stores for its
fulfillment centers.
In bond markets, the yield on the benchmark 10-year U.S.
Treasury ticked down to 0.553%, from 0.562% Friday.
In Asia, Hong Kong's Hang Seng Index dropped 0.6% by the close
of trading. Political tensions in the region continued to simmer as
Jimmy Lai, the outspoken publisher of Hong Kong's widely read
pro-democracy newspaper, was arrested Monday on suspicion of
foreign collusion under a new national security law. That step
marks an expansion of Beijing's crackdown on the former British
colony.
Elsewhere, the Shanghai Composite Index climbed almost 0.8% by
the end of the trading day, while South Korea's Kospi rose
1.5%.
In commodities, Brent crude, the international oil benchmark,
rose 0.9% to $44.79 a barrel. Gold ticked up 0.8% to $2,043.60 a
troy ounce.
Write to Anna Isaac at anna.isaac@wsj.com
(END) Dow Jones Newswires
August 10, 2020 09:16 ET (13:16 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.