(16 December 2020)DAILY MARKET BRIEF 1:Wall Street Surges Over 1% on Stimulus Hopes
Wall Street surged on Tuesday as investor sentiment was buoyed by the optimism surrounding a massive stimulus bill that is more likely to be approved by the Congress. Meanwhile, investors are waiting for clues from the Fed, which is about to hold its last meeting of the year later on Wednesday.
The S&P 500 rose 1.29%, the Dow added 1.13%, and Nasdaq increased by 1.25%, driven by a surge in Apple stock. The iPhone maker gained over 5% to a three-month peak after a Nikkei report said that the company planned to boost iPhone production by 30% in the first half of next year. Sources familiar with the matter told the Asian media that Apple asked suppliers to manufacture up to 96 million smartphones, including iPhone 12 and iPhone 11.
Stocks were boosted by the news that talks in Congress on the next COVID relief bill were making progress, as Democrats and Republicans seem to be more determined to roll out another round of stimulus. The optimism helped the S&P 500 index bounce back after a four-day losing streak, which had to do with the surging number of COVID cases in most US states. New York even tightened restrictions and more US regions might follow. Investors are waiting for the recently approved COVID vaccine to be distributed to the masses in the coming months.
Technology was the best performer among the S&P 500’s 11 major sectors.
Today, the Fed is likely to hint to loose monetary policy for the near future. The outlook for 2021 might improve on the back of vaccine roll-out.
Moderna is likely to become the second COVID vaccine producer to obtain FDA approval, as the regulator hasn’t expressed any concerns over its late-stage trial and is about to approve it on Friday. Nevertheless, Moderna stock fell over 3%.
In Asia, stocks are bullish on Wednesday, following the surge in US equities. Investors are focusing on the COVID vaccine news and the upcoming US stimulus package.
At the time of writing, China’s Shanghai Composite is up 0.12%, and the Shenzhen Component has gained 0.04% after opening lower. Chinese leaders will meet for the annual Central Economic Work Conference later this week to draw the economic priorities for next year.
Japan’s Nikkei 225 closed 0.25% higher.
Honda announced yesterday that it was recalling about 1.8 million cars worldwide in four campaigns. Some of the calls are related to reported fires. More than 80% of the recalled vehicles are in the US.
South Korea’s KOSPI is up 0.45% even as the country reported a record 1,078 new coronavirus infections on Wednesday.
In Australia, the ASX 200 closed 0.72% higher.
Hong Kong’s Hang Seng Index has gained almost 1%. The city's Legislative Council is about to vote on a HK$5 billion ($645 million) to HK$6 billion stimulus package for affected businesses next week.
