Market Analysis

Beyond the Numbers

U.S. Stocks May Give Back Ground After Yesterday's Rally
9/29/2020 9:07 AM

The major U.S. index futures are currently pointing to a modestly lower open on Tuesday, with stocks likely to give back ground following the rally seen in the previous session.

Stocks moved sharply higher during trading on Monday, extending the strong upward move seen last Friday. The major averages all climbed firmly into positive territory amid broad based strength on Wall Street.

The Dow jumped 410.10 points or 1.5 percent to 27,584.06, the Nasdaq spiked 203.96 points or 1.9 percent to 11,117.53 and the S&P 500 surged up 53.14 points or 1.6 percent to 3,351.60.

The strength on Wall Street came following a rally seen in the European markets, as traders picked up stocks at relatively reduced levels.

Traders seem to shrug off recent concerns about a surge in coronavirus cases and uncertainty about the U.S. presidential election.

The markets may also have benefitted from optimism about a new coronavirus bill after House Speaker Nancy Pelolsi said a new package is still possible. House Democrats plan to unveil a new $2.4 trillion coronavirus relief bill.

The price tag for the bill is $1 trillion less than a stimulus package the House passed back in May but may still be too high for Republicans.

Housing stocks showed a substantial move to the upside on the day, driving the Philadelphia Housing Sector Index up by 3.7 percent.

Significant strength was also visible among oil service stocks, as reflected by the 3 percent jump by the Philadelphia Oil Service Index.

The rally by oil service stocks came amid an increase by the price of crude oil, with crude for November delivery rising $0.35 to $40.60 a barrel.

Financial, semiconductor and networking stocks also saw considerable strength, moving higher along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are slipping $0.19 to $40.41 a barrel after rising $0.35 to $40.60 a barrel on Monday. Meanwhile, after jumping $16 to $1,882.30 an ounce in the previous session, gold futures are climbing $6.40 to $1,888.70 an ounce.

On the currency front, the U.S. dollar is trading at 105.64 yen compared to the 105.50 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1699 compared to yesterday’s $1.1666.


Asian stocks turned in a mixed performance on Tuesday as investors pinned hopes on a new U.S. coronavirus relief bill and looked ahead to the first U.S. presidential debate between Republican incumbent Donald Trump and Democratic challenger Joe Biden, set to take place later today.

Chinese shares rose modestly, with the benchmark Shanghai Composite index ending up 6.82 points, or 0.21 percent, at 3,224.36. Hong Kong's Hang Seng index dropped 200.52 points, or 0.85 percent, to 23,275.53.

Japanese shares recovered from an early slide to end marginally higher ahead of the Trump-Biden presidential debate. The Nikkei average edged up 27.48 points, or 0.12 percent, to close at 23,539.10, a seven-month high. However, the broader Topix index slipped 3.83 points, or 0.23 percent, to 1,658.10.

Telecom major NTT lost 2.9 percent on news it is preparing for a takeover of its mobile phone carrier NTT DoCoMo. Shares of the latter surged 15.8 percent while rival mobile carrier KDDI Corp fell 4.1 percent. Electronics maker Keyence Corp advanced 3.7 percent.

In economic news, a government report showed that overall consumer prices in the Tokyo area were up 0.2 percent year-on-year in September. That was shy of expectations for an increase of 0.3 percent, which would have been unchanged from the August reading.

Australian markets hit a three-week high in early trade before reversing direction to end the day little changed.

The benchmark S&P/ASX 200 index ended virtually unchanged at 5,952.10 as Melbourne entered the second step of its coronavirus roadmap. The broader All Ordinaries index edged up 6.60 points, or 0.11 percent, to close at 6,141.50.

Qantas Airways climbed 2.2 percent as the government extended a Covid-19 relief package for domestic airlines by four months.

Woodside Petroleum and Oil Search gained 0.9 percent and 1.5 percent, respectively after crude oil prices rose overnight. In the tech sector, Afterpay gained 2.5 percent to extend gains for the third day. Appen jumped 3.6 percent and WiseTech Global advanced 3.4 percent.

Bank of Queensland slumped 7.2 percent after it warned investors of major loan impairments.

Seoul stocks extended gains for a third straight session as investors welcomed progress over a U.S. stimulus plan. The benchmark Kospi climbed 19.81 points, or 0.86 percent, to 2,327.89. Steelmaker POSCO rose 1 percent, automaker Hyundai Motor added 1.7 percent, chipmaker SK Hynix advanced 1.8 percent and chemical maker LG Chem rallied 4.5 percent.

Industrial output in South Korea fell a seasonally adjusted 0.7 percent month-on-month in August, Statistics Korea said in a report - beating forecasts for a decline of 1.5 percent following the 1.6 percent increase in July.

On a yearly basis, industrial production sank 3.0 percent - missing expectations for a fall of 2.8 percent following the 2.5 percent drop in the previous month.

Another report showed that retail sales were up 3.0 percent on month and 0.3 percent on year in August after sinking 6.0 percent on month and gaining 0.5 percent on year in July.

Also today, the Bank of Korea said that business sentiment improved slightly in September with the corresponding index coming in with a score of 68, up 2 points from the previous month.


European stocks were moving lower on Tuesday as investors looked for cues from the final round of Brexit trade talks as well as the upcoming U.S. presidential debate.

The European Union and Britain have indicated that a post-Brexit deal was still some way off as negotiations recommenced over implementing their Withdrawal Agreement.

Covid-19 news flow and developments on the latest U.S. stimulus measures also remained on investors' radar.

The pan European Stoxx 600 slipped half a percent to 361.76 after posting its biggest single-day gain in three months the previous day.

The German DAX and the U.K.'s FTSE 100 shed around 0.7 percent, while France's CAC 40 index was down 0.4 percent.

Fiat Chrysler Automobiles N.V. fell over 1 percent and Peugeot S.A. lost 1.8 percent after they announced the composition of the Board of Stellantis, the new company that will result from the combination of their respective businesses.

Nokia Corp. shares rose half a percent. The company said it has signed a long-term strategic deal to become BT Group plc's 5G RAN supplier.

HELLA GmbH & Co. KgaA shares fell over 1 percent. The automotive part supplier is selling its business with front camera software of HELLA Aglaia including the related activities of HELLA Aglaia in testing and validation, to the Car.Software Organization, a subsidiary of Volkswagen.

Hamburger Hafen und Logistik AG gained 0.7 percent. The company has signed an agreement for taking a majority stake of 50.01 percent in the multi-function terminal Piattaforma Logistica Trieste in the Italian seaport of Trieste.

This will be the company's third participation in a port outside Hamburg after Odessa (Ukraine) and Tallinn (Estonia).

Travel-related stocks were declining as the global death toll from Covid-19 pandemic crossed 1 million.

British Airways owner IAG fell 2.4 percent, airline EasyJet declined 1.7 percent and engine maker Rolls-Royce tumbled 3.8 percent.

Plumbing parts distributor Ferguson soared 5.5 percent after restoring dividend.

High Street baker Greggs plunged 5.6 percent. The company has warned that trading will remain "below normal for the foreseeable future".

Cairn Energy declined 1.4 percent as it reported a loss before tax from continuing operations of $284.4 million for the six months ended 30 June 2020 compared to profit of $73.2 million, prior year.

In economic releases, Eurozone economic confidence index reached a six-month high in September driven by waning pessimism in industry, retail trade, construction and services, survey data from the European Commission showed today.

The economic confidence index rose to 91.1 in September from 87.5 in August. This was the highest score since March and above economists' forecast of 89.0.

U.S. Economic Reports

At 9:15 am ET, New York Federal Reserve President John Williams is scheduled to give keynote remarks at the 2020 U.S. Treasury Market Conference webinar.

Philadelphia Fed President Patrick Harker is due to speak about machine Learning at the virtual Official Monetary and Financial Institutions Forum on “The Economics of Artificial Intelligence and Machine Learning” at 9:30 am ET.

At 10 am ET, the Conference Board is scheduled to release its report on consumer confidence in the month of September.

Fed Vice Chair Richard Clarida is due to speak about "Future Considerations for Treasury Market Resilience" at the 2020 U.S. Treasury Market Conference held by the New York Fed at 11:40 am ET.

At 1 pm ET, Fed Vice-Chair for Supervision Randal Quarles is scheduled to participate in a discussion about financial Regulation at a Harvard Law School and Program on International Financial Systems event.

New York Fed President John Williams is also due to speak in a "Fireside Chat with New York Fed President John Williams" webinar event held by the Fisher Center for Real Estate & Urban Economics at 1 pm ET.
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