US equities extended the bullish stance on Monday, though this is still not enough to cover September losses. Besides tech, the best performers were the sectors tied to the economy, such as financials, energy, and industrials. Investors are more optimistic about the economic recovery after House Speaker Nancy Pelosi hinted that the $2.4 trillion stimulus deal was still in discussion. Also, investors are now betting on those sectors because they have previously underperformed as a result of the pandemic, and many stocks can be bought at a discount.
The S&P 500 rose 1.61%, the Dow added 1.51%, and Nasdaq surged 1.87%.
Financials and industrials added over 2%, with the former being driven by banking shares amid hopes of new stimulus. The Democrats’ stimulus package will be put to the vote next week. It includes unemployment benefits, direct payments to consumers and small business loans.
JPMorgan, Bank of America, and Citigroup rose over 3%.
Airlines surged on Monday, boosting industrials. Delta Air Lines and United Airlines rose more than 6%, with the latter announcing that its pilots agreed to cut their working hours to avoid furloughs planned from October. The proposed stimulus bill also includes aid for airlines. Boeing rose 6.1% after Federal Aviation Administration Chief Steve Dickson announced that his agency would carry out a 737 MAX evaluation flight later this week.
The tech sector was also among the best performers, with Apple, Microsoft, Amazon, Alphabet, and Facebook boosting Nasdaq.
Uber rose over 4% on the news that it was granted a new license to resume operations in London after winning its appeal against Transport for London.
Asian shares are mostly up in early trading on Tuesday, following the rally in US stocks. Investors on all continents will watch the debate between President Donald Trump and Democrat candidate Joe Biden later today.
At the time of writing, China’s Shanghai Composite is up 0.36%, and the Shenzhen Component has surged 1.04%. Investors are now waiting for a series of Chinese economic data, which includes the manufacturing and non-manufacturing PMIs, and also the Caixin manufacturing PMI, due to be published tomorrow, to grasp China’s recovery pace. In the weekend, data showed that Chinese industrial profits increased for the fourth straight month in August.
Japan’s Nikkei 225 is up 0.15% after initial losses. South Korea’s KOSPI has added 0.94%
In Australia, the ASX 200 has declined 0.08%, while Hong Kong’s Hang Seng Index fell 0.60%.
European stocks will open mostly higher on Tuesday, except for German DAX and Spanish IBEX, whose futures are now flashing red.
In the commodity market, oil prices have declined after gaining on Monday. On larger timeframes, crude prices are moving sideways. Currently, the worries related to demand outweigh hopes for a fresh stimulus. Also, the COVID has killed over 1 million people according to official data, with the number of cases accelerating in Europe and other regions. Both WTI and Brent are down over 0.60%.
Oil prices are under pressure amid oversupply fears as well. Libya’s oil production has surged this week from 100,000 barrels per day to 250,000 bpd. The country’s crude output was under a blockade for months, contributing to an increase in prices. Iranian oil exports have also increased. Elsewhere, Japan reported that oil imports tumbled 26% in August.
As for gold, the metal is bullish ahead of the debate between Trump and Biden. Gold is benefiting from a weakening US dollar, which saw the largest daily drop in a month on Monday. The metal is up 0.12% to $1,884.
In FX, the US dollar is losing ground after hitting two-month highs last week. Investors will be watching the presidential debate and a series of important US economic data to be released this week. So far, the USD Index is down 0.03%, while EUR/USD is up 0.04 to 1.1669. Yesterday, European Central Bank chief Christine Lagarde said that the ECB might consider further stimulus given the increasing number of COVID infections.
The pound has increased against both the euro and the USD ahead of the latest round of Brexit talks, with investors pricing in some cautious hopes that the UK and the EU would reach consensus given that a no-deal divorce would be disastrous for Britain, especially during the worsening pandemic. Also, the Bank of England reiterated that it doesn’t consider negative rates at the moment.