US stock index futures rose sharply early Monday to begin the first full week of trading in July, with investors linking at least part of the uptrend emanating from Wall Street to a powerful rebound in China.
However, Monday’s optimism in the market contrasts with a continued rise in coronavirus cases in the US.
How are the benchmarks working?
Futures for the Dow Jones Industrial Average YM00,
YMU20,
They rose 399 points, or 1.6%, to 26,158; those of the S&P 500 ES00 index,
ESU20,
they were rising 37.85 points, or 1.2%, to 3,166.75; while the Nasdaq-100 NQ00 futures,
NQU20,
They are 124.50 points, or 1.2%, higher at 10,480.25.
The Dow DJIA,
ended last week’s shortened vacation period by 3.3%, the S&P 500 SPX,
make a weekly profit of 4%, while the Nasdaq COMP composite index,
it returned 4.6%, after closing at a record on Thursday.
The Dow lost 12.6% from its all-time high closing on February 12, while the S&P 500 fell 7.6% from its all-time high on February 19.
The US market closed Friday in celebration of the Independence Day holiday.
What is driving the market?
US markets seemed to draw hope for one of legendary investor Warren Buffett’s first big deals and a recovery in Chinese stocks, despite a surge in COVID-19 cases over the weekend of July 4.
Market bulls have attributed the bullish complexion of the stocks to the growing hope of a sharp or V-shaped economic recovery in the US and Asia amid fiscal and monetary stimulus.
In Asian hours on Monday, Chinese stocks rose, with the flagship Shanghai Composite SHCOMP,
finishing 5.7%, at its highest level since 2018 and the CSI Index 300 000 300,
He enjoyed a similar return, after a front-page editorial in a state newspaper, China Securities Journal, said fostering a “healthy bull market” is important, according to a translation. The measures come as China is defending sanctions and criticism of its decision to impose a national security law in Hong Kong, prompting reprimand from countries like the United States and Canada.
In that context, the United States added more than 49,000 new cases on Sunday, according to data compiled by Johns Hopkins University. Cases in the US account for about a quarter of the global total of more than 11.4 million infections.
Beyond the rise in infections, the optimism reflected in stocks on Monday also comes as Goldman Sachs economists led by Jan Hatzius lowered their gross domestic growth forecast for a 202 contraction of 4.6%, up from a previous forecast. of a 4.2% drop in economic growth. For 2021, the bank sticks to its growth forecast to recover 5.8%.
Bank economists said they were encouraged by other countries’ response to the virus as a model of what the United States might see in the future. “Similar economies have clearly found a more efficient way to balance the reopening of the economy and keep the virus under control, and we believe the US is likely to find its way to a better approach as well,” wrote the Goldman economists.
Looking ahead, investors and traders look at the Institute for Supply Management’s non-manufacturing index, or service report, due out at 10 a.m. EST, a less-followed Markit report at 9 a.m. : 45 am
What actions are in focus?
- Buffett’s Berkshire Hathaway BRK.A,
+ 0.19%
BRK.B,
+ 0.47%
agreed to purchase natural gas transmission and storage assets from Dominion Energy
RE,
+ 0.41%
for around $ 10 billion, including debt, after the investor refrained from buying assets during the public health crisis thus far. Berkshire Hathaway shares were up 2.4% before the opening bell. - Actions of Tesla Inc.
TSLA,
+ 7.95%
It shot up 6.2% in pre-market trading on Monday after an analyst at JP Morgan raised its share price forecast for the electric vehicle maker, thinking it was holding well below the current value of the company. - Actions of Regeneron Pharmaceuticals Inc.
REGN,
+ 2.18%
It gained 4.6% in pre-market hours after the drug maker said it had started a Phase 3 clinical trial to test an antibody cocktail to prevent COVID-19.
How did other assets perform?
West Texas US Intermediate Crude CLQ20,
for August delivery fell 11 cents, or 0.3%, to $ 40.53 per barrel, on the New York Mercantile Exchange, 2.1% more. In precious metals, GCQ20 August gold futures,
it fell $ 2.90, or 0.2%, to $ 1,786.90 an ounce.
The 10-year Treasury note yields TMUBMUSD10Y,
It rose 2.3 basis points to 0.694%. Bond prices move inversely to yields.
The dollar fell 0.4% against a basket of its main rivals, based on trading in the ICE US Dollar index. DXY
In European equities, the Stoxx Europe 600 SXXP index,
up 1.5%, and London’s FTSE 100 UKX,
it was up 1.7%.
.
