U.S. Stocks Likely To See Further Upside

Asia-Pacific markets trade higher, shares rise in Japan, South Korea
2020-12-09
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2020-12-09
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U.S. Stocks Likely To See Further Upside

The major U.S. index futures are pointing to a higher open on Wednesday, with stocks likely to add to the gains posted in the previous session.

Stocks are likely to benefit from recent upward momentum amid optimism about coronavirus vaccines and a new fiscal stimulus bill.

Despite opening on a weak note, U.S. stocks ended higher on Tuesday as positive developments on the vaccine front and hopes of a fiscal stimulus outweighed reports showing a surge in coronavirus cases across the country. Buying interest, however, was somewhat subdued.

The major averages all ended modestly higher. The S&P 500 and the Nasdaq both posted new closing highs. The Dow ended higher by 104.61 points or 0.35 percent at 30,174.40. The S&P 500 moved up 10.29 points or 0.28 percent to settle at 3,702.25 and the tech-heavy Nasdaq climbed 62.83 points or 0.5 percent to 12,582.77.

News about the U.K. beginning to administer the coronavirus vaccine developed by Pfizer/BioNTech and that it found no safety concerns with the vaccine helped lift sentiment.

The continued surge in coronavirus cases and increasing number of hospitalizations in the U.S. boosted hopes for stimulus.

The U.S. Congress is expected to vote this week on a one-week stopgap funding bill to give negotiators more time to strike a compromise.

U.S. Senate Democratic leader Chuck Schumer said there were signs of progress in talks on a bipartisan bill.

Shares of Pfizer and BioNTech moved up sharply and gained about 3% and 2%, respectively.

DuPont, Honeywell International, Johnson & Johnson, Chevron and Walmart also posted strong gains.

The Food and Drug Administration on Tuesday announced that the Pfizer-BioNTech COVID-19 vaccine BNT162b2 is safe and effective.

The FDA in a detailed analysis concluded that safety data from about 38,000 participants suggest a “favorable safety profile,” with no specific safety concerns identified that would preclude issuance of an EUA.

The FDA said the vaccine met “prespecified success criteria for the study’s primary efficacy endpoint,” increasing the likelihood for the COVID-19 vaccine to get an emergency-use authorization this week itself. The findings also said that two months of trial data revealed no significant safety issues.

Commodity, Currency Markets

Crude oil futures are rising $0.19 to $45.79 a barrel after slipping $0.16 to $45.60 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,864.70, down $10.20 compared to the previous session’s close of $1,874.90. On Tuesday, gold climbed $8.90.

On the currency front, the U.S. dollar is trading at 104.10 yen compared to the 104.16 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.2108 compared to yesterday’s $1.2104.

Asia

Asian stocks rose broadly on Wednesday amid hopes of U.S. fiscal stimulus and positive vaccine news, with the U.K. starting the immunization program against the coronavirus pandemic.

Johnson & Johnson said it could obtain late-stage trial results for a single-dose vaccine in January, earlier than expected.

Chinese shares fell as concerns over Sino-U.S. relations weighed on sentiment. The benchmark Shanghai Composite index gave up 38.21 points, or 1.12 percent, to finish at 3,371.96, while Hong Kong’s Hang Seng index rose 198.28 points, or 0.75 percent, to 26,502.84.

Consumer prices in China were down 0.5 percent year-on-year year in November, the National Bureau of Statistics said. That missed expectations for a flat reading following the 0.5 percent increase in October.

On a monthly basis, inflation sank 0.6 percent, again missing estimates for a fall of 0.2 percent following the 0.3 percent slide in the previous month.

The bureau also said that producer prices dropped an annual 1.5 percent – but that beat forecasts for a decline of 1.8 percent following the 2.1 percent drop a month earlier.

Japanese shares ended at a near 30-year high as upbeat machinery data and signs of progress on a U.S. stimulus package boosted hopes of a swift economic recovery. The Nikkei average climbed 350.86 points, or 1.33 percent, to 26,817.94, its highest level since April 17, 1991. The broader Topix closed 1.17 percent higher at 1,779.42.

SoftBank Group Corp shares soared 5.6 percent on a Bloomberg News report that the conglomerate was considering buying back shares to boost Chief Executive Officer Masayoshi Son’s stake.

Machinery companies SMC Corp, Komatsu and Fanuc rallied 2-3 percent after data showed the value of core machine orders in Japan jumped a seasonally adjusted 17.1 percent sequentially in October. That blew away expectations for a gain of 2.8 percent following the 4.4 percent drop in September.

Australian markets rose for the seventh straight session on optimism about the first coronavirus vaccine rollouts in the U.K. and fresh hopes for a stimulus deal in the U.S.

A gauge of Australian consumer sentiment climbed for the fourth straight month in December to a 10-year high in a sign domestic activity will remain strong in the final quarter of 2020.

The benchmark S&P/ASX 200 hit a fresh nine-month high before ending up 40.80 points, or 0.61 percent, at 6,728.50. The broader All Ordinaries index rose 43.20 points, or 0.62 percent, to 6,965.40.

Miners extended recent gains, with BHP and Fortescue Metals Group rising 1.1 percent and 1.6 percent, respectively as Chinese coking coal futures hit a record high.

Fortescue said it expects strong iron ore consumption next year on solid Chinese steel demand as well as a post-Covid-19 recovery in other markets. Healius soared 7.4 percent on upbeat outlook and share buyback news.

Seoul stocks soared to close at a record high, with sentiment driven by the launch of mass vaccinations in Britain and anticipation for additional stimulus in the U.S.

The benchmark Kospi gained 54.54 points, or 2.02 percent, to close at 2,755.47.

Chipmakers, automakers and steelmakers paced the gainers after U.S. Senate Majority Leader Mitch McConnell offered to set aside some deadlock factors from the relief package. Samsung Electronics climbed 3.1 percent, SK Hynix jumped 4.8 percent, Hyundai Motor advanced 2.7 percent and POSCO added 2.8 percent.

Europe

European shares rose on Wednesday to hit February highs, with hopes of U.S. fiscal stimulus and positive vaccine news helping underpin investor sentiment.

All eyes turned to make-or-break Brexit talks as British Prime Minister Boris Johnson heads to Brussels this afternoon in a last-ditch bid to make a breakthrough in trade negotiations.

Investors shrugged off official data showing that German exports growth slowed more-than-expected in October.

Exports increased 0.8 percent month-on-month in October, slower than the 2.3 percent increase seen in September. Shipments were forecast to climb 1.2 percent.

At the same time, imports gained 0.3 percent, following a 0.2 percent rise in September. This was also slower than the economists’ forecast of +1 percent.

The pan European Stoxx 600 rose half a percent to 395.48 after inching up 0.2 percent in the previous session.

The German DAX climbed 0.8 percent, France’s CAC 40 index edged up 0.3 percent and the U.K.’s FTSE 100 added half a percent.

Electra Private Equity rallied 2.3 percent in London after its full-year pretax loss narrowed on a revenue basis.

Land Securities gained more than 2 percent after finalizing a new management team.

Tesco advanced 1.7 percent. The retailer said it expects to complete the $10.6 billion sale of its Asian businesses to CP Group on Dec. 18.

Transport group Stagecoach Group surged 6.7 percent after saying it has seen a “significant recovery” of usage and commercial revenue since May lockdown.

Clariant gained 0.7 percent. The Swiss chemicals company has appointed Conrad Keijzer as its new Chief Executive Officer.

Drug maker Roche Group rose 0.6 percent. The company announced a partnership with Moderna Inc. to utilize the Elecsys Anti-SARS-CoV-2 S antibody test in Moderna’s ongoing mRNA-1273 vaccine research trials.

Alstom dropped 0.6 percent. The French manufacturer of rolling stock said it has finalized a deal to invest $7 million in Cylus, an Israel-based cybersecurity specialist.

Casino Group lost about 1 percent. The retail company said that it has launched a transaction, aiming to strengthen its liquidity until end-2023, reduce bond debt and extend its average maturity.

Covestro AG, a manufacturer of high-tech polymer materials, jumped 3.4 percent after raising its full-year EBITDA outlook.

Copper producer Aurubis AG dropped nearly 1 percent despite reporting a rise in annual earnings.

U.S. Economic Reports

The Energy Information Administration is due to release its report on oil inventories in the week ended December 4th at 10:30 am ET.

At 1 pm ET, the Treasury Department is scheduled to announce the results of this month’s auction of ten-year notes.

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