Tuesday July 21st

21-07-2020

Stock futures jump as Wall Street tries to build on Monday’s rally, IBM jumps on earnings

U.S. stock index pointed to solid gains on Tuesday, building on a strong performance from the previous session, as IBM shares popped on stronger-than-forecast earnings. Dow Jones Industrial Average futures rose 169 points, implying an opening gain of 235 points. S&P 500 futures climbed 0.7% and Nasdaq 100 futures were up 0.8%. Dow-member IBM gained 5.4% in premarket trading after the company reported better-than-expected second-quarter earnings. Notably, IBM improved gross margins in three of its five units in the past quarter. Coca-Cola — another Dow component — said its profit fell 33% in the second quarter, but the company expressed optimism on demand as lockdown measures associated with the coronavirus were lifted. Shares rose nearly 1% in premarket trading. Tesla rose another 3% Tuesday morning as the automaker remains on a tear ahead of its earnings report Wednesday. Sentiment was also lifted Tuesday after the European Commission, the European Union’s executive arm, agreed to a 750 billion euro stimulus package. The stimulus is designed to help countries and sectors in the region most affected by the coronavirus pandemic. In the U.S., investors are monitoring the talks in Washington on the next coronavirus relief bill. Lawmakers face pressure to pass legislation before the end of the month, when the $600 per week federal unemployment insurance benefit is set to expire. “I believe the stock market would benefit from news of a stimulus package coming to fruition,” Kristina Hooper, Invesco’s chief global market strategist, said in a note on Monday. “In times like this, despite a massive and rising budget deficit for the US, I believe big government is likely to be good news for the stock market.” Tuesday’s premarket action followed a strong performance in technology shares on Monday that pushed the Nasdaq up 2.5%. Amazon led the gains in popular tech names with a 7.9% jump on Monday, its best day since December 2018. The Nasdaq 100, which consists of the 100 biggest non-financial companies in the composite, popped 2.8% for its biggest one-day gain since April. The market also cheered a slew of positive news on the vaccine front. Pfizer and BioNTech reported early positive data on a joint coronavirus vaccine. Meanwhile, another candidate from Oxford University and AstraZeneca showed a positive immune response in an early trial. With Monday’s gains on Wall Street, the S&P 500 turned green for 2020 with a 0.6% gain on the year, while the Nasdaq has risen 20% this year. The 30-stock Dow lagged, however, down 6.5% for 2020. Asia Pacific markets rose Tuesday after investor sentiment was supported by a slew of positive news on the coronavirus vaccine front and likely also from a pivotal European deal on a pandemic recovery fund.  In Japan, the Nikkei 225 gained 0.73% to 22,884.22 and the Topix index added 0.36% to 1,582.74. South Korea’s Kospi index rose 1.39% to 2,228.83. Hong Kong’s Hang Seng index advanced 1.83% in afternoon trade while the Straits Times index in Singapore gained 0.53% and the Jakarta Composite rose 1.41%. India’s Nifty 50 and the Sensex also gained more than 1% each. Chinese mainland shares also rose: The Shanghai composite recovered from earlier losses to gain 0.2% to 3,320.89 while the Shenzhen component index added 0.65% to 13,536.17 and the Shenzhen composite was up 0.72% at 2,232.69. Oil prices rose on Tuesday, helped by positive news about vaccine trials and a European Union stimulus deal reaching levels last seen when an oil price war erupted in early March between Russia and Saudi Arabia. Benchmark Brent crude was up $1.17 cents at $44.45, on track for its biggest daily rise since mid-June at around 2.7%. West Texas Intermediate gained 19 cents to $41.00, its highest daily rise in a month at around 2.6%. Gold scaled a nine-year peak on Tuesday propelled by a softer dollar and expectations of more stimulus measures to resuscitate pandemic-hit economies, while silver sprinted past $20 for the first time since September 2016. Spot gold gained 0.4% $1,823.29 per ounce after hitting its highest since September 2011. U.S. gold futures rose 0.5% to $1,825.50.