Stocks extend gains this morning

Stocks extend gains this morning 150 150 Realm

Stocks are higher this morning on optimism that more stimulus will be forthcoming and hopes that a coronavirus vaccine will be available in the US by early November (just before the US election). In the UK, the Bank of England has warned that the British economy may suffer more than previously projected from the coronavirus and as Brexit negotiations move towards the deadline at end of October, Michel Barnier, EU chief Brexit negotiator, has warned the UK that time to reach a deal is running out. 


Global Macro

  • US crude oil stocks fell by 9.362 million barrels in the week ended August 28th, 2020, the sixth consecutive period of decrease and compared to market expectations of a 1.887 million drop, according to the EIA Petroleum Status Report. Meantime, gasoline inventories were down by 4.320 million barrels, while markets had forecast a smaller 3.036 million decline.
  • Factory orders in the US jumped 6.4 percent month-over-month in July of 2020, the same as an upwardly revised increase in June. Figures beat market forecasts of a 6 percent rise as the manufacturing sector recovers from sharp disruptions in March and April due to the coronavirus outbreak. Demand for transport equipment increased 35.7 percent (vs 19.5 percent in June) boosted by vehicles and defence aircraft. Demand was also higher for machinery (2 percent vs 3.8 percent), fabricated metal products (2.7 percent vs 5.7 percent), and computers and electronics (2.6 percent vs -0.1 percent). Excluding transportation, factory orders increased at a slower 2.1 percent.
  • The ISM New York Current Business Conditions index dropped to 42.9 in August 2020 from the previous month’s 15- month high of 53.5. The latest reading pointed to a steep deterioration in NY business conditions as the economic recovery following the easing of coronavirus-induced restrictions faded due to a resurgence in new cases.
  • The British pound traded lower at $1.334 on Wednesday, having touched $1.348 for the first time since December 2019 in the previous session, as investors turned to the US dollar following better-than-expected US manufacturing data. Meanwhile, concerns about a lack of progress in Brexit negotiations could weigh on sterling, after talks between the UK and the EU stalled in August without any progress on key issues.
  • On Wednesday: European stocks ended on a strong note, rebounding from recent string of losses, amid optimism about global economic recovery thanks to fairly upbeat data on manufacturing activity from several countries across the world. Optimism about potential coronavirus vaccines and hopes about stimulus packages from central banks and governments too contributed to the positive mood in the markets. US stocks sharply higher. With the upward movement, the Nasdaq and the S&P 500 once again reached new record closing highs. Traders continue to express optimism about the economy recovering from the coronavirus-induced slowdown. They also shrugged off a report from payroll processor ADP showing much weaker than expected private sector job growth in the month of August. Asian stocks ended mixed as investors digested upbeat economic data from the U.S. and China and reacted to the comments from U.S. House Speaker Nancy Pelosi suggesting “serious differences” over a coronavirus aid package.

Disclaimer:  ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy. This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’