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Oct 20, 2020

U.S. stocks rise with aid deal facing long odds

BNN Bloomberg's mid-morning market update: October 20, 2020

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U.S. stocks rose even as lawmakers remained unable to clinch a fresh aid package to bolster the economic recovery. The dollar weakened.

The S&P 500 bounced back from Monday’s selloff as House Speaker Nancy Pelosi continued to negotiate with the White House on a deal near US$2 trillion. The Republican-controlled Senate continued to signal it favored a bill about one-quarter that size. Both houses of Congress need to approve any legislatoin. Stocks got a boost when Federal Reserve Bank of Chicago President Charles Evans said he’s “somewhat optimistic” about a 2021 economic recovery.

Futures on the Nasdaq 100 turned lower after the cash market closed whne both Netflix Inc. and Texas Instruments Inc. reported results. Tech shares mostly shook off the U.S. Justice Department’s decision to sue Google for allegedly abusing its power. Treasuries slumped, along with government bonds in Europe. Oil climbed toward US$41 a barrel.

A rally built on stimulus hopes has investors weighing Pelosi’s deadline of striking a deal today against speculation that the looming election will prove too much of a hurdle to overcome. Yet with Federal Reserve policy makers urging for more fiscal support to complement unprecedented monetary aid, many in the market may be willing to let the deadline come and go.

“The behavior of markets is reflecting optimism that there’s going to be big stimulus by January,” said John Normand, head of cross-asset fundamental strategy at JPMorgan Chase & Co. “I don’t think it’s necessarily a faith that Pelosi and Mnuchin and McConnell will agree to anything substantive by Pelosi’s deadline of today. It’s more of a look-through dynamic.”

In Europe, stocks edged lower. UBS gained after the Swiss firm’s traders performed better than most of their Wall Street rivals in the third quarter.

Leaders in Europe intensified efforts to slow coronavirus contagion, reviving lockdowns in some areas after piecemeal curbs made little impact on a disease that has infected 4.9 million people regionally.

Meanwhile, global cases exceeded 40 million, with the pandemic showing no signs of slowing. In the U.S., surges in Wisconsin and other battleground states pose a challenge for President Donald Trump two weeks before he stands for re-election.

Here are some of the main market moves:

Stocks

The S&P 500 Index gained 0.5 per cent as of 4 p.m. New York time.
The Nasdaq 100 Index gained 0.3 per cent.
The Stoxx Europe 600 Index decreased 0.4 per cent.
The MSCI Asia Pacific Index was little changed.

Currencies

The Bloomberg Dollar Spot Index fell 0.3 per cent.
The euro rose 0.5 per cent to US$1.1825
The British pound slipped 0.1 per cent to US$1.2933.
The Japanese yen was little changed at 105.48 per dollar.

Bonds

The yield on 10-year Treasuries increased 2.6 basis points to 0.7957 per cent.
Germany’s 10-year yield increased two basis points to -0.606 per cent.
Italy’s 10-year yield rose one basis point to 0.73 per cent.

Commodities

West Texas Intermediate crude rose 1.5 per cent to US$41.46a barrel.
Gold futures added 0.1 per cent to US$1,913.20 an ounce.

 

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