Tuesday, July 21, 2020

Asia Times: Nasdaq finished at a new record high as tech stocks soar, euro hits 4-month high as hopes for EU recovery fund deal rise

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  • Dollar
  • Gold
  • Euro
  • Stocks

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Market Recap: Nasdaq finished at a new record high as tech stocks soar, euro hits 4-month high as hopes for EU recovery fund deal rise

Wall Street closed higher on Monday, with Nasdaq scoring a record close at 10767.09 and its best gain in nearly 12 weeks. DJI and S&P rose less than 0.1% and 0.8% respectively. While US Covid-19 cases and deaths numbers continue to reach record new, investors are focusing more on corporates’ earnings result this week. Tech corporations including Microsoft, Tesla and Intel, which will publish their earnings this week, could offer greater insight about the economic outlook even with the worst pandemic in more than 100 years. Amazon climbed 7.9% higher, launching Nasdaq to fresh highs and putting S&P back to above breakeven for 2020, as more than three top-tier analysts raised its price target, saying the cloud and e-commerce giant is a two-pronged beneficiary of the pandemic.

Apart from tech stocks, the retail and consumer stocks on the other hand are still suffering with the US Covid-19 cases rising to nearly 3.8 million on Monday. New infections continued to surge in the South and West, while white house still refused to mandate facial coverings. Major retailers have begun to impose their own requirements, including Walmart, Best Buy and Lowe’s Cos in the US, and these stocks closed lower on Monday, performing just the opposite to the major indices and tech stocks. It is expected that tech and retail stocks’ performance will only get more divisive this week given the earnings announcement.

Shares of AstraZeneca fell 4% even after the drugmaker and the University of Oxford’s said its Phase 1 clinical trial data for the COVID-19 vaccine candidate showed promising results. The results were published Monday in The Lancet medical journal.

 

Indexes Daily Change (%) Net Change Closing Price
Dow +0.03% +8.92 26,680.87
S&P500 +0.84% +27.11 3,251.84
Nasdaq +2.51% +263.90 10,767.09
*Source: Bloomberg

The Euro hit a 19-week high of 1.1467 on Monday, as the EU leaders finally made progress on the 750-billion-euro recovery fund by revising a more tenable proposal after three days of talks. The fund’s backers initially proposed 500 billion euros of grants and 250 billion of loans as the mixture of the fund, while the so-called "Frugal Four" countries (Netherlands, Denmark, Austria and Sweden) objected to that much in grants. However, a new proposal revises the split in the recovery fund to 390 billion euros in grants and 360 billion of loans yesterday could be seen as a compromising sign, increasing the possibility of reaching consents by the end of this week.

The dollar, yen and franc performed the worst amongst G10 peers as investors focus more on risk-on assets including the euro, pounds and the stocks market.

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Silver futures marked their highest finish since August 2016 and gold ended higher for a second straight session Monday. Both safe-haven precious metals found strong support from the rise in global COVID-19 cases, which is threatening the economic recovery, raising expectations for additional fiscal stimulus measures.

Gold price rose 0.4% to settle at $1,817.40 an ounce, reaching a new high since July 8, also marking the highest level since September 2011.

Safe Haven Assets Daily Change (%) Net Change Closing Price
Gold +0.41% +7.35 1,817.77
Silver +3.01% +0.58 19.91
USD/JPY +0.23% +0.25 107.27
*Source: Bloomberg
US Treasury yields Daily Change (bps) Yield (%)
2-Year +0.2bps 0.15%
10-Year -1.6bps 0.61%
30-Year -1.7bps 1.31%
*Source: Bloomberg
Oil Futures Daily Change (%) Net Change Closing Price
Brent +0.32% +0.14 43.28
WTI +0.54% +0.22 40.81
*Source: Bloomberg

In Asia, stocks opened mostly higher on Tuesday morning, following the climb of Wall Street. Jack Ma’s Ant Group, subsidiary of the Alibaba group, is seeking a valuation north of $200 billion as it goes public in both Hong Kong and Shanghai, kicking off a much-anticipated market debut for China’s leader in internet finance. Hang Seng Index of Hong Kong rose more than 1% this morning.

Asia Daily Change (%) Net Change Last Price As of (GMT +8)
Nikkei +0.61% +139.23 22,856.71 10:30:01 AM
KOSPI +1.32% +29.43 2,227.63 10:51:10 AM
ASX200 +1.44% +87.93 6,089.50 10:50:44 AM
*Source: Bloomberg

US Companies reporting earnings next include:

  • United Airlines Holdings Inc – After market close
  • Interactive Brokers Group Inc – After market close
  • Coca-Cola Co – Before the bell
  • Texas Instruments Inc – After market close