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Oct 27, 2020

Tech shares gain after chipmaker M&A; oil climbs

BNN Bloomberg's afternoon market update: October 27, 2020

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Tech shares rose after Advanced Micro Devices Inc. announced a US$35 billion takeover of another chipmaker, helping to blunt concern about the impact of growing coronavirus infections. Oil climbed.

Xilinx Inc. surged after agreeing to be bought by AMD. Megacap tech names including Amazon.com Inc. and Apple Inc. also gained as investors sought out companies that fare well during lockdowns. Harley-Davidson Inc. jumped about 25 per cent on better-than-expected profit. Financial and industrial companies draged on the S&P 500 as it struggled to bounce back from its worst loss in a month on Monday.

The Stoxx Europe 600 Index fell to its lowest since May amid concern about the faster spread of the coronavirus on the continent. BP Plc warned of many challenges ahead as the pace of recovery in oil demand remained uncertain.

Another Kind of Voting

Stocks have been knocked around in recent weeks by speculation about whether lawmakers will pass a fiscal stimulus package, but with almost no possibility of that happening before Americans vote Nov. 3, investors were looking for fresh insight into corporate America’s health. A U.S. consumer confidence report came in worse than forecast Tuesday as data showed COVID-19 hospitalizations have risen at least 10 per cent in the past week in 32 states and the nation’s capital.

“COVID case counts and hospitalizations continue to rise -- these will continue to be closely watched as investors gauge the likelihood of more stringent mitigation measures,” said Yousef Abbasi, global market strategist at StoneX.

Elsewhere, the dollar slipped and Treasury yields dipped. Crude oil climbed as U.S. Gulf producers shut production ahead of Tropical Storm Zeta. Bitcoin rose past US$13,500, approaching levels not seen since just after the burst of the cryptocurrency market bubble almost three years ago.

These are some events to watch this week:

  • The Chinese Communist Party’s Central Committee holds its all-important plenum, where it’s expected to chart the course for the economy’s development for the next 15 years. Through Oct. 29.
  • Brexit negotiating teams have started intense daily negotiations, and these are likely to continue as both sides push to finalize a deal by the middle of November.
  • Bank of Japan and the European Central Bank have monetary policy decisions Thursday, followed by briefings from Governor Kuroda and President Lagarde.
  • The first reading of U.S. 3Q GDP Thursday is anticipated to be the strongest on record following a record dive in the prior quarter as many businesses were shuttered by the pandemic.

Here are the main moves in markets:

Stocks

  • The S&P 500 Index fell 0.1 per cent as of 2:41 p.m. New York time.
  • The Stoxx Europe 600 Index decreased 1 per cent.
  • The MSCI Asia Pacific Index rose 0.2 per cent.

Currencies

  • The Bloomberg Dollar Spot Index dipped 0.2 per cent.
  • The British pound rose 0.3 per cent to US$1.3061.
  • The Japanese yen strengthened 0.4 per cent to 104.43 per dollar.

Bonds

  • The yield on 10-year Treasuries dipped three basis points to 0.77 per cent.
  • Germany’s 10-year yield decreased four basis points to -0.62 per cent.
  • Britain’s 10-year yield fell four basis points to 0.23 per cent.

Commodities

  • West Texas Intermediate crude added 2.6 per cent to US$39.57 a barrel.
  • Gold strengthened 0.4 per cent to US$1,909.45 an ounce.

--With assistance from Nancy Moran, Andreea Papuc, David Wilson and Todd White.

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