Global stocks mixed after Donald Trump returns to White House

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U.S. stocks rose slightly on Tuesday after President Donald Trump returned to the White House after a few days of hospitalization with coronavirus.

The benchmark S&P 500 index rose 0.3% in afternoon trading, while the highly technological Nasdaq index climbed 0.1%.

After a strong rally on Monday, the Stoxx Europe 600 regional index rocked its morning losses to close almost flat. Frankfurt’s Xetra Dax gained 0.6%. Energy was the best performing sector in the region, driven by the rise in oil prices for the week.

Mr Trump remained in hospital for three days where he received treatment usually reserved for more severe coronavirus cases. He said in a video message that he was feeling better, although his doctor warned that the president was not “out of the woods” yet.

Global stock traders are weighing several risks for the rest of the year, including the US presidential election in November and the worsening pandemic that has prompted some countries to reinstate partial lockdowns.

Monday’s exuberance was a “rescue rally” but investors “are realizing that this is not the end of all our problems,” said Luca Paolini, chief strategist at Pictet Asset Management. Stocks are expected to trade in a more limited range until the outcome of the election and the extent of the US economic recovery becomes clearer, he added, noting that the improvement in weekly jobless claims was to the point of death.

Negotiations on new fiscal stimulus are expected to continue between U.S. lawmakers and the White House, although investors are unsure whether a package can be approved ahead of the election.

If the stimulus cannot be adopted before the vote and the outcome is contested, it may be some time before a package is approved, Paolini said. A delay of a few months is unlikely to be a big blow to the economic recovery, but could undermine confidence, he added.

Sophie Huynh, multi-asset strategist at Societe Generale, said that no matter who won the poll, “monetary policy is going to stay easy, and fiscal [policy] will remain united ”.

Brent, the international benchmark, gained more than 3% to exceed $ 42 a barrel at one point, after rising 6% on Monday. The rally – which takes the market to its highest level since mid-September – follows strikes in Norway, the largest crude-producing country in Western Europe, which threaten to cut production in the country.

The yield on 10-year and 30-year US Treasuries traded around their highest levels since June, at 0.78% and 1.6% respectively, as investors pulled out of debt.

In Europe, official data from Germany released on Tuesday underscored that the region’s economic powerhouse was doing better than its peers. New factory orders in Germany grew faster than expected in August, prompting ING analysts to say the country’s manufacturing sector could overtake services in the last quarter of the year.

In the Asia-Pacific region, stocks rose broadly, extending Monday’s gains. Japan’s Topix climbed 0.5%, Hong Kong’s Hang Seng 0.9% and South Korea’s Kospi 200 rose 0.3%.

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