News: S&P 500 rises for third consecutive trading session


Gains in tech shares help offset late slide in financials
Newsfeed16 Sep 2020
Photo credit: AFP Photo


US

US stocks closed higher as gains in technology shares helped offset a late slide in financials. Crude oil pushed higher, while the dollar was little changed.

The S&P 500 Index rose for a third consecutive trading session, led by communication services, real estate and consumer discretionary shares. JPMorgan Chase & Co Ltd, Citigroup Inc, and Bank of America Corporation pushed financials into the red.

Investors are awaiting the Federal Reserve’s policy meeting Wednesday (16 September) to gauge the outlook for markets following a slide of about 2% in global stocks this month. The Fed is expected to maintain its dovish stance after earlier saying it will shift to a more relaxed approach on inflation. Central bank largesse is shoring up sentiment in the face of risks from the pandemic, the US presidential election and the possibility of a no-deal Brexit. – Bloomberg News.

The S&P 500 Index closed 0.52% higher at 3,401.20 on Tuesday (15 September). The Dow Jones Industrial Average remained little changed, and the Nasdaq Composite Index gained 1.21% to 11,190.32.

 

EUROPE

Europe stocks rose for a third day as positive corporate updates boosted retailers and miners rose on data showing an acceleration in China’s economic recovery.

The Stoxx Europe 600 Index closed 0.66% higher in London at 370.96 on Tuesday (15 September), adding to its longest winning streak in a month. Retailers rallied after Hennes & Mauritz AB returned to profit and Ocado Group Plc reported a surge in sales. Miners advanced after Chinese data showed a rebound in consumption as virus restrictions eased, and a bigger-than-expected expansion in industrial production.

Investors this week are awaiting key rate decisions due from the Federal Reserve and the Bank of England. For the Stoxx 600, which has been stuck in a 20-point range since June, the 200-day moving average remains the ceiling to watch. The benchmark crossed above it in intraday trading today (15 September).

Investors are “rotating” rather than “chasing” stocks following the rebound since March, according to a fund manager survey. A net 51% of respondents said a bull market has started, versus just 25% in May.

Among notable movers, Fiat Chrysler Automobiles NV climbed 9% after agreeing to shrink a dividend tied to its merger with PSA Group by about USD3.1b. The reduction will be partially offset by the company’s investors getting a stake in French supplier Faurecia SE, whose shares tumbled 6.6%. – Bloomberg News.

 

JAPAN

Japan Inc should rejoice at the prospect of a new premier: It can only get better from here.

Yoshihide Suga, the top aide to Prime Minister Shinzo Abe, has been elected leader of the ruling Liberal Democratic Party in a landslide, paving his way to the country’s top post. Parliament’s vote Wednesday (16 September) will make it official.

For industrial Japan, Suga’s victory comes as a nascent, post-COVID 19 recovery is afoot. Recent survey data pointed to an upturn for manufacturers. Certain sectors like machinery and transport equipment are doing far better than others. Industrial production in July rose from a month earlier. Meanwhile, machine tool orders have been flat instead of sharply down.

Some companies’ outlooks are looking increasingly optimistic, too, with bigger order books. Industrial robot exports to China from Japan, for example, rose 63.1% from a year earlier, according to market analysts.

Suga’s track record is promising. Earlier this year, as the risk of having supply chains in China became apparent, he came out in support of diversifying. At the time, the government announced a package worth USD2.2b to incentivize corporations to move operations out of China. Meanwhile, the future premier is looking to push consolidation of small and medium businesses, where survival was becoming harder as bankruptcies rise. Suga’s past experiences show he favours reform, having been involved in Japan’s postal privatisation.

Japan Inc’s industrial giants can also expect a hand if needed. Last week, Nissan Motor Co Ltd, which has struggled financially for the past two years under its failing corporate strategy and the Carlos Ghosn scandal, bagged a JPY180b loan (USD1.4b), of which JPY130b was guaranteed by the government, the largest such deal ever. Nissan is headquartered in Yokohama, where Suga was a member of local government. Meanwhile, in a regular press conference at the height of the pandemic, Suga said that Tokyo would provide wide-ranging support for the auto industry.

Still, the positive momentum seems to be working in Suga’s favour. Just consider the commitment to hosting the pandemic-delayed Olympics next year. In a Reuters interview, he said the nation would do “whatever it takes” to make sure the global sporting event, originally planned for this summer, will happen in 2021. As in previous years, the games had pushed construction activity and filled up order books. Hopes of inbound tourism boosting consumption had buoyed sentiment. – Bloomberg News.

The Nikkei 225 Index opened remained little changed on Wednesday (16 September). It fell 0.44% to 23,454.89 the previous session.


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