Daily summary: Global stocks start new month on a positive note

 

European indices finished today's session higher as better-than-expected PMI readings for the Eurozone, in particular Italy and Spain which were hardest hit by the coronavirus, lifted market sentiment.  Also investors welcomed the news about a phase 3 trial of the Eli Lilly's  (LLY.US) coronavirus antibody drug. DAX rose 2.7%, CAC40 added 2.1% and FTSE 100 finished 2.3% higher.

US indices are also trading higher. S&P 500 reached new local highs. Even before the session started, contracts rose above the highs from the second half of July and were at their highest since February 24th. It is worth recalling that S&P500 is only 3.5% below its historic highs from February 20th. Meanwhile, Nasdaq hit new historic high today. First, the level of 11,000 points was broken, and then the index jumped to 11,050 points. Today's strong movements were supported by the positive news from the economy. The ISM manufacturing index came in above expectations. Moreover, the inflow of new orders in the sector rose above 60 points. However, this is not the end. The Atlanta Fed's GDP model suggests that the third quarter will bring growth of 19.6% at an annualized rate! Previous forecast from the end of July indicated an increase of only 11%. The Atlanta Fed model well predicted the change in GDP in Q2. Wall Street indexes managed to gain despite simmering tensions between the Washington and Beijing. Earlier Trump administration was expected to unveil a new set of punitive measures against “a broad array” of Chinese-owned software deemed to pose national security risks. Later on President Trump reversed course on a planned ban after Microsoft (MSFT.US) announced its planning to move forward with talks to buy TikTok from Chinese owner ByteDance, and hopes to conclude a deal by Sept. 15. US President gave the two firms 45 days to come to a deal. If this happens then Microsoft would have an opportunity to become a major competitor on the social media market.
Meantime, investors are waiting for more details regarding the fiscal coronavirus relief deal as US lawmakers are still struggling to reach agreement. On the corporate side,  HSBC and Societe Generale posted weaker than expected quarterly results. In the US,  McKesson Corp raised its full-year earnings guidance and  both Tyson Foods Inc and Clorox quarterly figures beat market expectations. Marathon Petroleum stock rose 2% after company announced it will sell its gas stations for $21 billion.

 

Total number of COVID-19  infections surpassed 18 million so far, as the pandemic is now adding a million infections every four days. Some market participants remain concerned that surging coronavirus infections could further hamper the global economic recovery as countries such as Australia and the Philippines decided to reinstate lockdowns. Meantime Florida reported lowest number of new coronavirus cases within the past few weeks. However, this improvement is deceptive as many testing centers closed ahead of the weekend due to hurricanes . Nevertheless, the improvement is also visible in other states, such as Arizona, although the death rate continues to increase throughout the USA.

Oil prices climbed 2% in afternoon trading on Monday. OPEC + will reduce production cuts this month while US shale producers most likely will increase output in coming weeks due to a recovery in oil prices. During today's session WTI crude futures rose 2% to $ 41.1 Brent crude futures were also higher at $ 44.2 a barrel.

Economic calendar for Tuesday does not seem to be particularly interesting. RBA interest rate decision and Australian retail sales figures are the key releases scheduled for Asian session, while US Factory Orders, Canada Manufacturing PMI figures, US Durable Goods Orders and API Crude Oil Stock Change report will be on watch during US trading hours. On earnings front, Walt Disney, Sony, Activision Blizzard Inc. and Bayer will report their quarterly results.