Tuesday, June 30, 2020

Dow Jones Delivers Best Single-Day Climb in 3 Weeks

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News shaping
the markets today

     

What’s happening: The Dow Jones index recorded its best one-day spike in around three weeks on Monday.

What happened: With investors concerned about rising coronavirus cases in various states in the US, the Dow had booked a decline of 3.3% last week.

Wall Street kicked off this week with a strong rally in indices trading, with investor sentiment boosted by upbeat economic data and hopes of an additional stimulus package to support an economic rebound. The upturn in Boeing’s shares helped the blue-chip Dow Jones index record sharp gains on Monday.

Why it matters: US economic reports continued to surprise the markets, despite various states witnessing a surge in covid-19 cases and re-imposing some restrictions on businesses.

The National Association of Realtors reported on Monday that pending home sales had jumped 44.3% in May. This was significantly higher than the expectations of a 15% gain in sales.

Shares of Boeing spiked more than 14% yesterday, after US air safety regulators announced the resumption of key flight tests of the company’s 737 Max from a Seattle airport.

Coty’s shares climbed around 13% after the company agreed to purchase a 20% stake in Kim Kardashian West’s beauty brand.

Investors shrugged off news of rising covid-19 cases, which have crossed 10 million globally and resulted in over half a million deaths. Several states, including Texas, Florida, and Arizona, have been forced to roll back their reopening plans to curb further spread of the pandemic.

Investors focused on the possibility of additional stimulus measures from the Federal Reserve to help the economy recover from the coronavirus crisis.

The Dow Jones index jumped 580 points to close at 25,595.80 on Monday, recording its best single-day percentage rise since June 5. The S&P 500 rose 1.5% to settle at 3,053.24, backed by a rise in industrial and consumer discretionary shares.

The Nasdaq also added 1.2% to close at 9,874.15 in the previous session, following a 1.9% decline last week.

US stocks traded at elevated levels yesterday, despite which the greenback edged higher, sending the US dollar index, which measures the dollar’s performance versus a basket of foreign currencies, higher by 0.1%.

What to watch: Traders await a basket of economic reports from the US, including the S&P CoreLogic Case-Shiller home price index, Chicago PMI and consumer confidence index. The S&P CoreLogic Case-Shiller home price index, which rose 3.9% in March, is expected to climb another 4% in April. The Chicago PMI is projected to surge to 45 in June, from 32.3 in May. The Conference Board’s consumer confidence index is likely to rise to 91.8 in June, versus May’s reading of 86.6.

Markets will also continue to keep an eye on daily coronavirus cases, with the US reporting almost 2.6 million cases, with more than 126,000 deaths.

The Markets Today

     

Crude oil will be in focus today, ahead of the API’s (American Petroleum Institute) report on crude investories.

Context: Oil futures closed higher on Monday, following some rebound in energy demand, despite the probability of another round of lockdowns following a resurgence in global coronavirus cases.

Details: Concerns over a surge in infections in various US states have kept crude prices range bound of late. Meanwhile, Chesapeake Energy Corp announced plans to file for bankruptcy over the weekend.

Against this backdrop, the markets welcomed some strong economic reports by countries around the globe, including the world’s largest crude importer China reporting a 6% rise in industrial profits for May, representing the first upturn in 2020.

The Eurozone also recorded an improvement in economic sentiment across all sectors, as the European Commission reported a rise in overall sentiment to 75.7 points in June, versus a reading of 67.5 points in May.

WTI (West Texas Intermediate) crude for August gained 3.1% to end the trading day at $39.70 per barrel on the NYMEX on Monday, after losing 3.4% last week.

Global benchmark Brent oil for August rose 1.7% to $41.71 per barrel, following a 2.8% weekly decline.

August natural gas rose 10.7% to $1.709 per million British thermal units on Monday.

What to watch: Investors await the crude oil stockpiles report from the API. Stocks of crude oil in the US rose 1.7 million barrels in the week ending June 19, versus a 3.9 million rise in the prior week.

With cases still continuing to escalate worldwide, crude oil is likely to remain under pressure, testing the $40 mark. Crude oil futures fell 0.8% to $39.38 a barrel in today’s European session.

Other Markets: European indices were trading mixed at 8:30am GMT, with the FTSE 100 falling by 0.3%. The French 40 and Dax 30 index had gained 0.1% and 0.2%, respectively.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

What else to watch today

     

UAE’s inflation rate, Canada’s GDP as well as the US Redbook Index.