While stocks are reacting to election uncertainty and the COVID-19 pandemic, BMO Capital Markets chief investment strategist Brian Belski Bullish remains in the long run.
Global equities and futures of US equities fell on Monday, putting the S&P 500 index on course to hit a high time, as investors’ optimism about a potential treatment for the exciting markets of coronavirus.
Futures tied to the S&P 500 rose 0.6%, suggesting that the US equities benchmark may open higher after closing on a record high on Friday. Abroad, the pan-continental Stoxx Europe 600 climbed 1.4%, while most major Asian markets closed higher.
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The Food and Drug Administration on Sunday said it had authorized the use of convalescent plasma, the anti-antibody-rich blood component taken from recovered Covid-19 patients, for the treatment of serious coronavirus cases. The authorization for emergency use falls short of full approval, said FDA Commissioner Stephen Hahn, adding that the agency will evaluate more evidence.
“Any news that is positive about the virus will drive markets higher,” said Seema Shah, chief strategist at Principal Global Investors. “However, any news about a vaccine or treatment should be treated with skepticism, given the process it must go through before it is used by the general population.”
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Investors and economists are also weighing data on new coronavirus infections in a bid to determine how sustainable an economic recovery can prove. The number of new cases in the US dropped from a day earlier, reached its lowest level in more than two months and recorded a ninth straight day with less than 50,000 new cases.
“The most effective U.S. states have apparently managed to get this virus under control without having to pull hats off and inflict more economic damage,” said Holger Schmieding, chief economist at Berenberg Bank. “The labor market continues to improve, but at a slow pace. This is encouraging: the world’s largest economy is beginning to recover. ‘
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The sharp rise of the S&P 500 since the spring – despite a recession – suggests that investors bet the least of the economic pain is over and that corporate earnings, the most reliable driver of share prices, will start climbing again next year.
In bonds, yields on the 10-year US Treasury benchmark hit 0.641%, up from 0.639% Friday.
In Asia, shares in Tencent Holdings rose 5.8% in Hong Kong following media reports that U.S. officials had privately trusted U.S. companies to continue working with the popular social media program WeChat, analysts said.
Write to Anna Isaac at [email protected]
