Stocks

US stocks, crude jump on revived stimulus hopes, Trump's improving health

Reuters NEW YORK | Updated on October 06, 2020

FILE PHOTO   -  REUTERS

Dow Jones index, S&P 500 up over 1.5 per cent, Nasdaq Composite gains 2.32 per cent

US stocks closed sharply higher and crude prices surged Monday as renewed optimism surrounding stimulus negotiations and news of US President Donald Trump's health progress helped calm investor anxiety.

US House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin continued talks toward a bipartisan agreement on a new pandemic relief package. That revived hopes for a new round of stimulus more than two months after emergency unemployment benefits expired for millions of Americans.

“This probably is a bit of a relief rally,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. “Two weeks ago there wasn't much hope and now there's a growing consensus that stimulus could pass before the election.”

“That seems to be where the market is leaning right now.”

Trump's physician, Dr. Sean Conley, announced late in the session that the president has met or exceeded all standard criteria to be discharged following hospitalisation for treatment of Covid-19.

“The markets don't like uncertainty and there seems to be more clarity today on the president's health,” Carlson added.

Democratic contender Joe Biden opened his widest lead in a month in the US presidential race, according to a Reuters/Ipsos poll released on Sunday.

The Dow Jones Industrial Average rose 465.83 points, or 1.68 per cent, to 28,148.64, the S&P 500 gained 60.18 points, or 1.80 per cent, to 3,408.62 and the Nasdaq Composite added 257.47 points, or 2.32 per cent, to 11,332.49.

Positive updates regarding Trump's health and a flurry of deal-making activity helped European shares close at a two-week high.

The pan-European STOXX 600 index rose 0.81 per cent and MSCI's gauge of stocks across the globe gained 1.64 per cent.

Crude prices surged on waning uncertainties, and were further supported by an escalating oil workers’ strike in Norway, where six offshore oil and gas fields were shut down.

US crude futures settled at $39.22 per barrel, a 5.86 per cent gain. Brent crude advanced 5.14 per cent to settle at $41.29 per barrel.

The safe-haven dollar dipped and riskier currencies outperformed on mounting stimulus optimism.

The dollar index fell 0.4 per cent, with the euro up 0.58 per cent to $1.1784.

The Japanese yen weakened 0.41 per cent versus the greenback at 105.78 per dollar, while sterling was last trading at $1.2982, up 0.39 per cent on the day.

Risk-on sentiment also pushed longer-term US Treasury yields to five-year highs and the yield curve steepened to its widest since late August.

Benchmark 10-year notes last fell 25/32 in price to yield 0.7751 per cent, from 0.694 per cent late on Friday.

The 30-year bond last fell 76/32 in price to yield 1.5804 per cent, from 1.48 per cent late on Friday.

Gold inched higher as the dollar slipped, despite gains in equities markets.

Spot gold added 0.7 per cent to $1,911.58 an ounce.

Published on October 06, 2020

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