24 June 2020

NASDAQ Hits New Record Close as Tech Stocks Climb

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News shaping
the markets today

     

What’s happening: The Nasdaq 100 closed higher on Tuesday, booking another record close above the 10,000 mark.

What happened: US data releases indicating a rebound in economic activity supported the markets yesterday. Wall Street also cheered as White House trade adviser Peter Navarro backtracked his comments on the US-China deal to convey that the Phase 1 deal “continues in place.”

Stocks of retailers, cruise operators and banks rose on Tuesday, although the biggest gainers were tech stocks like Apple, Netflix and Amazon, all of which hit record intraday highs. The jump in tech stocks resulted in the tech-heavy Nasdaq index posting gains for the eight consecutive indices trading day and reaching a new all-time high.

Comments from the country’s top infectious disease expert Dr. Anthony Fauci could, however, keep investors on edge in the coming days.

Why it matters: The US released healthy economic data on Tuesday, which pointed towards a strong recovery in economic activity. The flash reading of IHS Markit’s composite PMI (purchasing manager’s index) jumped to 46.8 in June, from 37 in May. The services sector index climbed to 46.7 in June, from a reading of 36.9 in May, while the manufacturing index spiked to 49.6, from a prior reading of 39.8. While the readings were all below the 50-mark (any figure below this suggests a contraction in activities), they showed solid signs of improvement.

New home sales also surged 16.6% in May to an annual rate of 676,000, surpassing expectations of 632,000.

Investor sentiment was also supported by Treasury Secretary Steven Mnuchin’s comments on the possibility of additional covid-19 stimulus in July.

For now markets seem to have shrugged off news of rising coronavirus infections across the country, with states like Arizona, Texas, Florida and California recording a spike amid efforts to reopen their economies. Dr. Anthony Fauci warned during his testimony before the Congress that the country could witness critical trends in covid-19 cases over the next couple of weeks. Contrary to the President’s suggestions, Dr. Fauci said he intended to increase testing.

Apple’s shares rose on optimism surrounding the company’s WWDC announcements. Netflix has been on a winning streak as the video company continues to benefit from shelter-at-home orders. Both Netflix and Amazon stand to benefit from the renewed rise in infections, as people stay home and businesses close shop.

All three major indices finished the trading session off their best levels. The Nasdaq 100 booked gains for the eighth straight session, rising 0.7% to finish at a new close of 10,131.37. The Dow Jones index climbed 131 points to settle at 26,156.10, while the S&P 500 index rose 0.4% to 3,131.29.

What to watch: The economic calendar is light today, with only the US house price index scheduled for release. Investors will continue to look out for US-China trade developments and any comments from Peter Navarro and the President in this matter may move the markets.

Investors will also keep an eye on the coronavirus numbers, with the total global cases climbing past 9.2 million. The US has so far confirmed around 2,347,020 cases with about 121,220 deaths.

The Markets Today

     

The New Zealand dollar will be in focus today, following the Reserve Bank of New Zealand’s interest rate decision.

Context: The New Zealand dollar made solid gains earlier in the session, ahead of the central bank’s rate decision. The kiwi tended lower after the Reserve Bank of New Zealand maintained its official cash rates at a record low of 0.25% and warned of economic risks ahead.

Details: New Zealand’s central bank had lowered its cash rate by 75 basis points in March to a record low of 0.25% and said it intended to leave the rate unchanged till March 2021.

In addition to leaving rates unchanged at its latest meeting, the bank maintained its bond buying program at N$60 billion. The bank assured investors of further stimulus packages being provided when needed.

New Zealand reported no new coronavirus cases for 24 straight days following lockdown measured in the country. However, the streak ended on June 16 when two women tested positive for the virus.

The bank’s committee said that the country would witness a substantial decline in economic activity during the June quarter owing to the global crisis caused by the pandemic. New Zealand’s tourism industry has been crushed by border closures and fight cancellations globally.

The NZD/USD forex pair declined by 0.4% to 0.6463 during the European session.

What to watch: The New Zealand dollar is expected to remain under pressure due to the central bank’s dovish tone. Traders will also look out for the country’s balance of trade data, scheduled to be released tomorrow, with hopes of this supporting the kiwi.

Other Markets: European indices were trading lower at 8:30am GMT, with the FTSE 100, French 40 and Dax 30 index down by 0.6%, 0.6% and 0.5%, respectively.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

What else to watch today

     

ECB’s non-monetary policy meeting, EIA’s crude oil stockpiles as well as the US MBA mortgage applications.

 

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