Credit Suisse Still Favors Chinese Stocks, Stephens Says
U.S. equities rallied to records after President Donald Trump backed away from earlier threats and signed a coronavirus aid package.
The S&P 500 Index, Dow Jones Industrial Average and Nasdaq Composite closed at all-time highs following Trump’s surprise approval of the combined US$2.3 trillion Covid-19 relief and government funding package. Germany’s DAX Index also rose to a record. Treasuries dipped and the dollar strengthened.
Bitcoin retreated after a rally over the holiday pushed it past US$28,000 for the first time.
U.S. investors cheered the U.S. aid package, restoring some of the optimism that drove global stocks to a record this month even as the pandemic escalated. In approving the bill, Trump also demanded a vote in Congress to replace the US$600 in direct stimulus payments with US$2,000 -- a non-binding request that is unlikely to pass both chambers. Still, Goldman Sachs Group Inc. upgraded its first-quarter U.S. economic growth forecast because of the measure.
“The new law is large enough to make a significant difference for individuals,” Dennis DeBusschere, head of portfolio strategy at Evercore ISI, said in a note to clients. “Ignore the noise about the ‘disappointing’ checks and focus on the setup for a robust economic recovery in 2021, particularly in the services sector.”
Alibaba Group Holding Ltd. tumbled in Hong Kong despite boosting its share buyback program to US$10 billion, amid ongoing concern over China’s inquiry into alleged monopolistic practices. Regulators over the weekend ordered affiliate Ant Group Co. to return to its roots as a provider of payments services, a development that threatens to clip its growth.
On the coronavirus front, more restrictions are being imposed to fight the spread of the new, more infectious strain. Indonesia imposed a temporary ban on all foreigners from visiting the country, while Taiwan will increase the quarantine period for flight crews to seven days. Meanwhile, the European Union kicked off a continent-wide vaccination campaign less than a week after clearing a shot developed by Pfizer Inc. and BioNTech SE.
Elsewhere, the pound weakened after the U.K. last week clinched a historic Brexit trade deal with the European Union.
Here are some key events coming up:
- U.S. pending home sales and goods trade balance data are due Wednesday.
- U.S. initial jobless claims figures are published Thursday.
- Most global stock markets are closed Friday for New Year’s Day.
These are the main moves in markets:
- The S&P 500 Index rose 0.9 per cent as of 4 p.m. in New York.
- The Stoxx Europe 600 Index rose 0.7 per cent.
- The MSCI Asia Pacific Index gained 0.1 per cent.
- The MSCI Emerging Market Index slipped 0.2 per cent.
- The Bloomberg Dollar Spot Index rose 0.1 per cent.
- The euro rose 0.1 per cent to US$1.2208.
- The British pound decreased 0.8 per cent to US$1.3449.
- The Japanese yen weakened 0.4 per cent to 103.86 per dollar.
- The yield on 10-year Treasuries increased less than one basis point to 0.93 per cent.
- Germany’s 10-year yield declined two basis points to -0.57 per cent.
- Britain’s 10-year yield was unchanged at 0.25 per cent.
- West Texas Intermediate crude fell 1.2 per cent to US$47.66 a barrel.
- Gold fell 0.5 per cent to US$1,873.58 an ounce.
--With assistance from Eric Lam and Cormac Mullen.