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Beyond the Numbers

Futures Pointing To Initial Strength On Wall Street
8/10/2020 8:46 AM

The major U.S. index futures are currently pointing to a higher opening on Monday, although early buying interest may be somewhat subdued.

The modest upward momentum on Wall Street comes after President Donald Trump signed executive orders aimed at extending coronavirus relief to Americans.

The executive orders include an extension of expanded unemployment benefits, a deferral of student loan payments through 2020, a federal moratorium on evictions and a payroll tax holiday.

Trump signed the orders as lawmakers continue to struggle to reach an agreement on a new coronavirus relief package.

However, the orders are likely to face legal challenges, as Congress controls the funding needed to continue the programs.

Concerns about rising tensions between the U.S. and China may also limit any early upside for the markets.

U.S. stocks ended slightly higher on Friday after languishing in the red for most of the day's session.

Investors were following the progress in talks between the Trump administration and Democratic leaders over a new coronavirus relief package and reacting to reports indicating spikes in virus cases in several parts of the world.

Growing uncertainty about a new coronavirus relief plan following the failure of the policymakers to arrive at an agreement rendered the mood cautious on Wall Street.

Tensions between the U.S. and China have escalated following the Trump administration unveiling a ban on U.S. transactions with ByteDance's TikTok and Tencent-owned WeChat.

Data showing a bigger than expected increase in U.S. employment in the month of July failed to lift sentiment. The Labor Department's report said employment jumped by 1.8 million jobs in July after surging up by 4.8 million jobs in the previous month. Economists had expected employment to increase by 1.6 million jobs.

The bigger than expected spike in employment came amid a sharp increase in employment in the retail sector, which added 258,300 jobs

The unemployment rate dropped to 10.2 percent in July from 11.1 percent in June. The unemployment rate was expected to dip to 10.5 percent.

While the Dow ended up 46.50 points or 0.2 percent at 17,433.48, extending gains to a sixth session, the Nasdaq snapped a seven-day winning streak as it settled at 11,010.98 with a loss of 97.09 points or 0.9 percent.

The S&P 500 index edged up 2.12 points or 0.1 percent to settle at 3,351.28, closing higher for a sixth consecutive day.

American Express (AXP), JP Morgan Chase (JPM) and Goldman Sachs (GS) moved up 2 to 2.8 percent, contributing significantly to Dow's positive close.

On the other hand, Apple (AAPL) declined 2.6 percent, while Microsoft (MSFT), Visa (V), Boeing (BA) and Intel (INTC) lost 1 to 2 percent.

Commodity, Currency Markets

Crude oil futures are climbing $0.55 to $41.77 a barrel after sliding $0.73 to $41.22 a barrel last Friday. Meanwhile, after plunging $41.40 to $2,028 an ounce in the previous session, gold futures are jumping $10.90 to $2,038.90 an ounce.

On the currency front, the U.S. dollar is trading at 106.06 yen versus the 105.92 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1761 compared to last Friday’s $1.1787.

Asia

Asian stocks rose on Monday after U.S. President Donald Trump signed executive orders aimed at extending coronavirus relief to Americans.

Democratic leaders, however, said that the new executive orders circumventing deadlocked congressional negotiations are far from adequate to meet the scope of the crises facing the United States.

Chinese shares ended notably higher after the release of inflation data. The benchmark Shanghai Composite index inched up 25.22 points, or 0.75 percent, to 3,379.25, while Hong Kong's Hang Seng index ended down 0.63 percent at 24,377.43.

Consumer prices in China were up an annual 2.7 percent in July, the National Bureau of Statistics said. That exceeded expectations for an increase of 2.6 percent and was up from the 2.5 percent gain in June.

On a monthly basis, inflation rose 0.6 percent - again topping forecasts for a rise of 0.4 percent following the 0.1 percent decline in the previous month.

The producer prices were down 2.4 percent year-on-year versus expectations for a fall of 2.5 percent after skidding 3.0 percent a month earlier.

Australian markets rallied, with financials leading the surge after the U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin said on Sunday they were open to restarting stimulus talks.

The benchmark S&P/ASX 200 index jumped 105.40 points, or 1.76 percent, to 6,110.20 as Prime Minister Scott Morrison said internal border closures were unlikely to lift before Christmas. The broader All Ordinaries index ended up 102.20 points, or 1.66 percent, at 6,247.10.

The big four banks rose around 3 percent while Credit Corp Group shares surged as much as 6.7 percent.

Mining heavyweights ended mixed, with BHP rising 1.4 percent while Rio Tinto dropped half a percent. Gold miner Newcrest Mining closed half a percent higher despite confirming a Covid-19 case at its Lihir Island facility.

Seoul stocks hit over two-year high on hopes for additional stimulus measures in the United States and amid signs that the U.S. economic rebound is still making headway despite a surge in Covid-19 cases.

The benchmark Kospi rallied 34.71 points, or 1.48 percent, to 2,386.38, marking the highest since 2,404.04 points on June 15, 2018.

Automakers rallied on expectations of a sales jump at home. Hyundai Motor surged 15.7 percent and its affiliate Kia Motors added 9.7 percent.

New Zealand shares eked out modest gains as the country marked 100 days without community transmission of the Covid-19. The benchmark NZX-50 index rose 36.76 points, or 0.32 percent, to 11,683.44, led by dual-listed banks ANZ and Westpac Banking.

Markets in Japan and Singapore were closed for Mountain Day and National Day holidays, respectively.

Europe

European stocks were modestly higher on Monday after U.S. jobs data beat forecasts and a report showed China's factory deflation eased in July, adding to signs of an economic recovery.

However, markets were off their day's highs amid a fresh flare-up in Sino-U.S. tensions and continued uncertainty about a deal on a U.S. stimulus package.

Amid mounting tensions between Washington and Beijing, U.S. Health Secretary Alex Azar offered President Donald Trump's strong support for democratic Taiwan.

China said it will impose sanctions on 11 U.S. citizens in response to similar measures from Washington on Chinese and Hong Kong officials.

In economic releases, a survey showed that investor morale in the euro zone rose for a fourth consecutive month in August.

Sentix's index for the euro zone improved to -13.4 from -18.2 in July. That marked the highest reading since pre-lockdown times in February.

The pan European Stoxx 600 was up 0.1 percent at 364.01 after rising 0.3 percent on Friday. France's CAC 40 index and the U.K.'s FTSE 100 rose about 0.3 percent, while the German DAX slid 0.1 percent.

Technology stocks were coming under selling pressure, with Infineon Technologies losing 1.4 percent and Dialog Semiconductor declining over 2 percent.

Cloud and ICT provider QSC advanced 1.5 percent after its second-quarter consolidated net loss narrowed to 5.1 million euros from 5.5 million euros in the first quarter.

Porsche Automobil Holding fell over 2 percent. The company, which holds the majority stake in German auto maker Volkswagen AG, reported that its first-half Group result after tax was a loss of 329 million euros, compared to prior year's profit of 2.38 billion euros. Volkswagen shares were down 0.7 percent.

Speed-train maker Alstom declined 1.7 percent. The company, which is in deal to buy Bombardier Transportation, said it remains convinced of the strong strategic rationale for the acquisition.

The company also said it is confident in its ability to restore in the medium term the profitability and commercial performance of the business.

BP Plc shares rallied 2.2 percent and Royal Dutch Shell gained 1.5 percent as oil prices rose on hopes that the worst may be over for fuel demand.

AVEVA Group added 1.8 percent. The information technology company confirmed that it has entered into discussions with OSIsoft, LLC regarding a potential acquisition.

Clarkson shares surged 11 percent. After delivering a robust first-half performance, the shipping services provider said it would pay the equivalent of the deferred 2019 final dividend as an extra payment along with this year's interim dividend.

FirstGroup soared 5 percent and Go-Ahead Group shares rose over 2 percent. The public transport giants have welcomed the announcement from the Department for Transport regarding extended funding of bus services in England, to be provided by the U.K. government.

U.S. Economic Reports

At 10 am ET, the Labor Department is scheduled to release the results of its Job Openings and Labor Turnover Survey for the month of June.
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