Gains among S&P 500 sectors were led by defensive-oriented utilities, real estate and consumer discretionary, while energy fell alongside crude oil prices
Wall Street equities finished broadly higher on Monday as reopening hopes boosted sentiment, sending the Dow Jones and S&P 500 indexes to their record highs. Gains among S&P 500 sectors were led by defensive-oriented utilities (+1.36%), real estate (+1.18%) and consumer discretionary (+1.17%), while energy (-1.25%) fell alongside crude oil prices.
The VIX volatility index extended declines to a multi-month low of 20.0, suggesting that the stock market has probably returned to a status of complacency. This renders equities susceptible to a sudden surge in volatility should this Wednesday’s Federal Open Market Committee (FOMC) meeting deliver surprises. Separately, Germany joined Italy, France and other countries in halting the use of the AstraZeneca Covid-19 vaccine over safety concerns. This may further delay the Eurozone’s vaccine progress.
The 10-year Treasury yield pared some gains while the US Dollar index (DXY) jumped for a second day after Treasury Secretary Janet Yellen said in a TV interview that “US inflation risks remains small and manageable”. This was similar to Fed Chair Jerome Powell’s comments arguing that the current monetary stimulus measures is “appropriate”, hinting that the Fed may hold its policy rate and bond-purchasing program largely unchanged at the upcoming FOMC meeting. A brighter economic outlook alongside accommodative monetary and fiscal policy may underpin a stock market rally in the medium to long term.
Asia-Pacific markets look set to open stronger on Tuesday following a decent US lead. Futures across Japan, Australia, Hong Kong, Taiwan and Malaysia are pointing to mildly higher trade. Australia’s ASX 200 index opened up 0.27% higher, led by real estate (+1.02%), consumer discretionary (+01.03%) and information technology (+0.85%) sectors, while energy (-0.66%) lagged behind. Japan’s Nikkei 225 index opened modestly higher as investors awaited a speech from BoJ Governor Haruhiko Kuroda.
Looking ahead, the Eurozone and German ZEW economic sentiment data headline the economic docket alongside US retail sales and industrial production figures.
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