Wall Street surged on Tuesday as investor sentiment was buoyed by the optimism surrounding a massive stimulus bill that is more likely to be approved by the Congress. Meanwhile, investors are waiting for clues from the Fed, which is about to hold its last meeting of the year later on Wednesday.
The S&P 500 rose 1.29%, the Dow added 1.13%, and Nasdaq increased by 1.25%, driven by a surge in Apple stock. The iPhone maker gained over 5% to a three-month peak after a Nikkei report said that the company planned to boost iPhone production by 30% in the first half of next year. Sources familiar with the matter told the Asian media that Apple asked suppliers to manufacture up to 96 million smartphones, including iPhone 12 and iPhone 11.
Stocks were boosted by the news that talks in Congress on the next COVID relief bill were making progress, as Democrats and Republicans seem to be more determined to roll out another round of stimulus. The optimism helped the S&P 500 index bounce back after a four-day losing streak, which had to do with the surging number of COVID cases in most US states. New York even tightened restrictions and more US regions might follow. Investors are waiting for the recently approved COVID vaccine to be distributed to the masses in the coming months.
Technology was the best performer among the S&P 500’s 11 major sectors.
Today, the Fed is likely to hint to loose monetary policy for the near future. The outlook for 2021 might improve on the back of vaccine roll-out.
Moderna is likely to become the second COVID vaccine producer to obtain FDA approval, as the regulator hasn’t expressed any concerns over its late-stage trial and is about to approve it on Friday. Nevertheless, Moderna stock fell over 3%.
In Asia, stocks are bullish on Wednesday, following the surge in US equities. Investors are focusing on the COVID vaccine news and the upcoming US stimulus package.
At the time of writing, China’s Shanghai Composite is up 0.12%, and the Shenzhen Component has gained 0.04% after opening lower. Chinese leaders will meet for the annual Central Economic Work Conference later this week to draw the economic priorities for next year.
Japan’s Nikkei 225 closed 0.25% higher.
Honda announced yesterday that it was recalling about 1.8 million cars worldwide in four campaigns. Some of the calls are related to reported fires. More than 80% of the recalled vehicles are in the US.
South Korea’s KOSPI is up 0.45% even as the country reported a record 1,078 new coronavirus infections on Wednesday.
In Australia, the ASX 200 closed 0.72% higher.
Hong Kong’s Hang Seng Index has gained almost 1%. The city’s Legislative Council is about to vote on a HK$5 billion ($645 million) to HK$6 billion stimulus package for affected businesses next week.
Oil prices are retreating on Wednesday on the back of the weekly report from the American Petroleum Institute, which showed an unexpected build of 1.973 million barrels last week, while analysts expected a 3.5-million-barrel draw. Investors are also concerned about the tighter restrictions imposed in many US states and European countries. Both WTI and Brent have lost over 0.20% so far.
Gold is bullish as investors focus on the progress on US relief package and the Fed’s upcoming interest rate decision. The COVID vaccine roll-out is also supporting hopes for a rapid economic recovery. The metal has gained 0.27% to $1,860.
In FX, the US dollar is bearish for a third session in a row, as interest in risk assets is boosted by optimism surrounding the COVID vaccine, Fed’s loose policy, and fresh stimulus. The USD Index is down 0.03% to 90.388 to update the lowest level since April 2018. EUR/USD is up 0.07% to 1.2160.
The sterling is correcting after a strong session on Tuesday, driven by reports that a Brexit deal was still possible. However, UK Prime Minister Boris Johnson reiterated that the most likely outcome was a no-deal divorce.
