Market Commentary: US markets ignore social unrest to rally

StockFanatic

Publish date: Wed, 03 Jun 2020, 12:11 PM

· A late-session rally pushed Wall Street to solid gains as investors looked past widespread social unrest and pandemic worries to focus instead on easing lockdown restrictions and signs of economic recovery.

· Global stocks are trading at a three-month high as businesses continue to reopen around the world and manufacturing gauges show economies stabilising following coronavirus shutdowns. That's despite a slew of risks still on the horizon, including tense US-China relations that may jeopardize a hard-won trade deal.

· The sometimes-violent demonstrations across US cities over the killing by police of George Floyd, an unarmed black man, aren't yet seen as a major drag on the economy and corporate profits.

· However, if the violence continues it might worsen the coronavirus' impact on businesses, as a lot of stores would close; people wouldn't be able to shop and that would further hurt the economy.

· The Dow Jones Industrial Average climbed 267.63 points, or 1.1%, to 25,742.65, led by Home Depot, American Express and Goldman Sachs. The S&P 500 rose 25.09 points, or 0.8%, to 3,080.82, and the Nasdaq Composite added 56.33 points, or 0.6%, to 9,608.37. The technology-heavy gauge is only 2.1% below its February high.

· The benchmark S&P 500 has risen for six of the past seven sessions-and is up 38% from its March low-boosted by data suggesting the downturn in the US economy has bottomed and hopes that the coronavirus will be brought under control.

· Many analysts attribute the recent rebound to an unprecedented level of stimulus offered by the Federal Reserve and Congress. The Fed has already cut rates to zero, and has promised to do whatever else is needed, even as it ballooned its balance sheet to US$7.1 trillion.

· The Fed is not alone, and analysts also point to global central banks including the European Central Bank, expected to expand its programmes this week.

· In Asia, Japanese stocks extended early morning gains to end higher, with the Nikkei Stock Average rising 1.2% to 22,325.61 amid improved sentiment on signs the global economy may be recovering.

· Australia may keep its record growth streak intact. While analysts foresee a 0.4% drop in first-quarter GDP from the prior three months, early data released by the RBA suggests the economy may have eked out a small expansion. Most of the pandemic's effects will fall in the current period, so the country may not have the two consecutive quarters of contraction that mark a technical recession - something it's avoided since 1991.

· Markets could be vulnerable to a shallow pullback; any developments in US-China trade may spook markets, for instance.

• Access to over 6088 cross-asset publications and commentary delivering insights from global research and strategy teams.

• Easy-to-use search capabilities, with better and faster text-based searching.

To Subscribe: Click Here | Read Reports Highlights: Click Here

Discussions

Be the first to like this. Showing 0 of 0 comments

Featured Posts

MQ Chat

New Update. Discover investment communities that resonate with your ideas

VCPlus

Trade Confidently & Analyze Charts Conveniently - Download VCPlus IOS & Android App Now!

Latest Videos