US stock indices took different routes on Monday, but the general vibe is bullish since equities had their best month in over three decades. S&P 500 (-0.22%) and Dow Jones (-0.78%) have lost ground, while Nasdaq (+0.68) continued the rally driven by Apple and Tesla.
August was the best month since 1986 for the S&P index, as investors focused on the Fed’s dovishness, positive results in the COVID-19 vaccine race, and the impressive rally in tech stocks. Nasdaq has also updated its record high. The S&P’s five-month rally since April, during which the index gained over 35%, has been the stronger run since 1938, as per data from Bespoke Investment Group.
The best performers among the S&P’s 11 sectors were healthcare and utilities, while energy has dragged the index down.
Nasdaq was driven by Apple and Tesla, as the two implemented stock splits that may attract more retail investors thanks to the lower prices. Apple closed the session 3.4% higher, and Tesla rose 12.6%.
The bearish sentiment was fueled by the fact that the number of coronavirus cases in the US exceeded 6 million yesterday, and many states still noted acceleration in the number of infections.
Asian stocks are also mixed in early trading on Tuesday, though bulls are stronger. The retreat in some Asian markets as well as in the US indices might have to do with the portfolio rebalancing at the end of the month rather than a trend reversal.
At the time of writing, China’s Shanghai Composite is up 0.06%, and the Shenzhen Component has gained 0.22%. The market is boosted by the performance of the dominant manufacturing industry. China’s Caixin manufacturing PMI for August rose to 53.1 from July’s 52.8 while analysts expected a slight decline to 52.6.
Australia’s ASX 200 is down 1.75% as tensions between Australia and China, its largest trade partner and source of tourists, are mounting after Chinese authorities arrested an Australian news anchor. The Reserve Bank of Australia is about to update its monetary policy decision later today, though no changes are expected.
Hong Kong’s Hang Seng index has increased by 0.30% after a weak start.
Japan’s Nikkei 225 is up 0.03% after a sluggish start. Japan’s manufacturing PMI (PMI) rose to 47.2 last month, up from 46.6 in July.
South Korea’s KOSPI has surged 1.14%. The country’s Ministry of Economy and Finance is expected to issue the equivalent of $145.68 billion of sovereign debt next year – a record bond issuance for Korea.
European shares will be mixed on Tuesday, but they saw the best monthly performance in August since the financial crisis in 2008 as most countries have been easing their lockdowns. In the futures market, German DAX is up 0.67% while Britain’s FTSE has declined by 0.54%.
In the commodity market, gold is surging amid a weakening US dollar. The metal is now up 0.81% to $1,994.55. The American currency has declined to its lowest level in years against majors after Fed Vice Chairman Richard Clarida confirmed the Fed’s policy move towards inflation, which was previously announced by Fed Chain Jerome Powell. The central bank is planning to maintain the interest rates close to zero for a longer period, prompting investors to dump the US dollar. Gold is also leveraging the rising tensions between China and the US and also Australia.
Oil prices have also benefited from the weaker US dollar, recovering Monday losses. Brent and WTI have gained about 1% each. Still, there is much uncertainty in the energy market, as economists anticipate a second wave of the pandemic.
In FX, EUR/USD is up 0.46% to 1.1991, as the greenback is tumbling to the lowest level in two years.
The Japanese yen is also in the spotlight, as investors bet on who will become the new Prime Minister after Shinzo Abe’s sudden resignation. USD/JPY is down 0.23% right now.
Elsewhere, the pound has gained 0.34% against the US dollar.
