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Alice Blue - Market Talk_July 2, 2020

Asian shares were mostly higher Wednesday

Asian shares were mostly on Wednesday after Wall Street had the best quarter since 1998, reducing signs of global economic damage from the coronavirus epidemic.

Japan’s benchmark Nikkei 225 slipped 0.2% to close at 22,187.27. South Korea’s Kospi rose 1.0% to 2,130.14. Australia’s S&P ASX 200 rose 0.9% to 5,953.50. Hong Kong’s Hang Seng rose 0.5% to 24,427.19, while Shanghai Composite rose 0.3% to 2,993.60.

Despite signs of global economies, the market continues to boom, severely ill due to the outbreak, with uncertainty still new as cases continue to increase worldwide while no treatment or vaccine for COVID-19 is available.

A quarterly Bank of Japan survey released on Wednesday showed that the sentiment of Japanese manufacturers had hit its lowest level in more than a decade, as the epidemic for the world’s third-largest economy affects exports and tourism.

Headline measurements for “tankan”, tracking sentiment among major manufacturers, fell to minus 34, the lowest since 2009, from minus eight the previous quarter. The tanker measures corporate sentiment by subtracting the number of companies and states that business conditions are negative from those who respond that they are positive.

A survey showed China’s manufacturing activity improved in June, adding to the signs of a gradual recovery from the country’s deepest economic slowdown since at least the mid-1960s.

The monthly purchasing manager’s index, released by Caixin, a trade magazine, rose to 51.2 from May’s 50.7 on a 100-point scale, with numbers above 50 indicating increased activity. A sub-index for export orders increased from 47 to 41.7.

The Chinese economy is recovering, but only gradually because global demand for exports is weak, and consumers and businesses inside China are wary of other outbreaks and other threats of the epidemic.

On Wall Street, the S&P 500 climbed 1.5%, bringing its profit to nearly 20% for the quarter. This rebound hit a 20% drop in the first three months of the year, the worst quarter in the market since the 2008 financial crisis. The crisis came as an epidemic stalled the economy, and millions of people lost their jobs.

“This is the first time you’ve been back-to-back (quarters) in this way since the 1930s,” said Baird Delwich, investment strategist at Baird. “It is very unprecedented.”

Markets boomed in the second quarter as investors looked beyond the unemployment numbers and raised hopes that the economy could exit relatively quickly from its severe, sudden recession.

The promise of huge amounts of aid from the Federal Reserve and Congress helped the markets move upward. Low-interest rates typically drive investors away from stocks and lower but less volatile returns from bonds, and the Federal Reserve has pinned short-term interest rates to record levels of nearly zero.

Reports appeared optimistic during the quarter, which showed that employers started hiring again, and retailing resumed as governments relaxed lockdown orders.

But most of Wall Street says nothing is expected to come close to a recurrence of stonewalling in the second quarter. Many states have been forced to lift the ban on rising infections.

The increase in confirmed new cases, which has prompted the European Union to prevent US travelers from entering, is raising suspicion that the economic recovery could happen quickly according to market forecasts. This helps explain why the market moved somewhat cold in June.

On Tuesday, the country’s top infectious disease specialist, Dr. Anthony Fauci, warned that if Americans do not start following public health recommendations, the number of new infections daily could rise to 100,000.

Beyond coronaviruses, analysts also point to upcoming US elections and other risks that could upset markets. If Democrats sweep Congress and the White House, which many investors see as least possible, it could mean higher tax rates, which could undermine corporate profits.

The S&P 500 gained 47.05 points to close at 3,100.29 points on Tuesday. The Dow Jones Industrial Average rose 0.9% to 25,812.88. The Nasdaq Composite climbed 1.9% to 10,058.77.

Technology stocks recorded a steady rise in this quarter, climbing to 27.6%, with the consumer discretionary sector second with a gain of 30.2%. Airlines and cruise operators traded wildly after working hard for the first quarter.

Apple was once again the most valuable company in the S&P 500, gaining 43.5% for the second quarter, with American Airlines climbing 7.2% for the quarter, while Royal Caribbean Cruise added 56.4%. Nevertheless, they remain below about 60% each year.

Benchmark US crude dropped 56 cents to $ 39.83 a barrel. It dropped 43 cents to $ 39.27 a barrel on Tuesday, still nearly double where it was at the end of the first quarter. Brent crude fell 56 cents to $ 41.15 a barrel.

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About Dwipen Gogoi

Dwipen Gogoi, MBA (IB and IT) and PGDFT from Pune. (Technical Analyst of AliceBlue) I am a You Tuber, Blogger and doing Technical Analysis last 10 years in Stock, Commodity and Forex Market. i am creating various trading strategies for day traders, swing traders, scalp traders.

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