S&P 500 rebounds to post biggest gain in two weeks
US stocks bounced back a day after their biggest rout in four months, with investors encouraged by better-than-forecast economic data even as they kept a wary eye on growing coronavirus infections.
The S&P 500 Index jumped 1.19%, the most since 12 October, after President Donald Trump said he plans “a very big package” of stimulus following the election. The dollar and Treasury yields rose after reports showed a decline in weekly jobless claims and a surge in third-quarter economic growth that reversed much of the pandemic collapse.
An exchange-traded fund that tracks the Nasdaq 100 edged lower after the close of regular trading following a flurry of earnings releases. Twitter Inc’s (TWTR US) new-user numbers disappointed, while revenue for Alphabet Inc (GOOGL US) beat estimates. Amazon.com Inc (AMZN US) projected operating income that trailed estimates after reporting better-than-forecast sales.
Even with Thursday’s gains, global equities are headed for the worst weekly decline since March amid new lockdown measures and US politicians’ failure to agree to a stimulus plan before the 3 November election. The COVID-19 surge in the Midwest rose to a record, led by single-day highs in Kansas, Iowa, and South Dakota as the region’s outbreak spread toward both coasts. Anthony Fauci, the government’s top infectious disease doctor, said the earliest a vaccine might be available is late December or early January. – Bloomberg News.
The Dow Jones Industrial Average climbed 0.52% to 26,659.11, and the Nasdaq Composite Index gained 1.64% to 11,185.59.
Europe stocks erased earlier gains and closed little changed after the European Central Bank (ECB) chief warned that European economies are losing momentum more quickly than expected as new COVID-19 lockdowns threaten the recovery.
The Stoxx Europe 600 Index closed down 0.12% to 341.76 in London, after yesterday (29 October) slumping to a five-month low following the announcement of new restrictions in France and Germany. Among the biggest decliners, Nokia Oyj (NOKIA FH) plunged 18% after lowering its 2020 outlook. Credit Suisse Group AG (CSGN SW) retreated after missing analyst estimates in key businesses.
Cyclicals including travel and leisure and energy stocks led gains after President Christine Lagarde said there was “little doubt” the ECB will agree on a new package of monetary stimulus in December, given the risks from the pandemic.
Looming additional restrictions across Europe have triggered fears that the economic recovery will come to a halt, pushing the Stoxx 600 into oversold territory for the first time since March. The US election and difficult fiscal stimulus negotiations have added to the uncertainty, with European equities set for the worst monthly drop since March.
Among the biggest gainers, Royal Dutch Shell Plc (RDSA LN) rose after beating expectations and raising its dividend. Vestas Wind Systems AS (VWS DC), the world’s biggest wind turbine manufacturer, gained after agreeing to buy out Mitsubishi Heavy Industries Ltd’s (7011 JP) 50% share in the partnership. – Bloomberg News.
Even as some of Japan’s industrial giants begin offering an improving earnings outlook, the nation’s biggest railway operators – once havens of profit stability – are facing a triple threat from the continuing pandemic, dwindling share prices and mounting losses.
Among the 33 sectors in the benchmark Topix Index, land transport is the sixth-worst performer, down 26% this year even as the broader index has pared losses to around 6%. Despite many industries returning to normal with the coronavirus outbreak relatively stabilised, Japan’s railway giants are falling by the wayside.
Central Japan Railway Co Ltd (9022 JP), operator of the money-printing bullet-train line that links Tokyo and Osaka, joined its fellow JR companies Wednesday (28 October) in forecasting a loss. The JPY185b (USD1.8b) in red ink will be its first operating loss since the country’s rail network was privatised in 1987 and is more than twice the average analyst estimate. Shares of JR Central fell as much as 3.1% on Thursday morning after the projection.
And there is little prospect for improvement in the sector, with analysts wary that the bad news is starting to stack up.
As the pandemic swells abroad, further bad news looms. Other Japanese companies facing losses are being forced into radical restructuring: ANA Holdings Inc (9202 JP) is cutting jobs, cancelling routes and said to consider selling shares, while Mitsubishi Heavy Industries Ltd is reported to be freezing development of its years-in-the making regional jet.
West Japan Railway Co Ltd (9021 JP), which operates trains in Osaka and other western parts of the country, has lost over USD8b in market value this year, and is slated to announce earnings Friday, along with a revision of a now outdated mid-term plan. – Bloomberg News.
The Nikkei 225 Index opened 0.24% lower at 23,276.02 91 on Friday. It fell 0.37% to 23,331.94 the previous session.
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