U.S. stocks rallied toward records, oil surged past US$45 and the dollar fell as the formal start of President-elect Joe Biden’s transition spurred investors into risk assets.
The Dow Jones Industrial Average climbed to 30,000 for the first time, led by a 5 per cent rally in Boeing Co. The S&P 500 jumped more than 1 per cent. Back-to-normal stocks led the gains. Carnival Corp. surged 9 per cent, MGM Resorts International added 7 per cent and Planet Fitness Inc. jumped 8 per cent. The Russell 2000 rose almost 2 per cent and is on track for its best month ever.
Energy companies in the S&P 500 surged 4 per cent after oil topped US$45 a barrel in New York for the first time since March 6. Bitcoin rallied past US$19,000. The dollar weakened versus major peers and Treasuries slipped. Gold fell toward US$1,800 an ounce.
“The market has room to run but on the premise that investors are trying to rotate into these undervalued areas of the market and more into the value play rather than the technology,” Shawn Snyder, head of investment strategy at Citi Personal Wealth Management, said by phone.
Stock markets globally trended higher after the General Services Administration acknowledged Biden as the apparent winner of the presidential election. The move reduces political uncertainty in the U.S., giving Biden and his team access to current agency officials, briefing books, some US$6 million in funding and other resources. Markets also cheered his plan to nominate former Federal Reserve Chair Janet Yellen to lead the Treasury Department.
“Markets love certainty and the move by Trump overnight partially removes ambiguity over the presidential succession,” Jeffrey Halley, a senior market analyst with Oanda Asia Pacific Pte, wrote in a note. “A Biden administration is expected to be much less isolationist, with hopes that the U.S. will reengage on global trade and improve relations with China.”
Wall Street is also viewing a possible Yellen appointment as reason to count on more economic stimulus. She recently said the recovery will be uneven and lackluster if Congress doesn’t spend more to fight unemployment and keep small businesses afloat. That’s fueling the rotation out of defensive technology stocks and into assets that have been hardest hit by the pandemic, such as airlines and energy producers.
In other markets, gold dropped to a four-month low and the dollar weakened against its major peers.
In New Zealand, the government proposed adding home prices to the central bank’s remit to rein in an overheating property market. The move has prompted investors to reduce bets on lower interest rates, pushing the kiwi to the highest level since June 2018.
In Germany, the operator of the DAX index announced the biggest overhaul since the index’s inception in 1988. The number of members will increase to 40 from 30 and new quality criteria will be imposed on both existing and prospective members.
These are the main moves in markets:
The S&P 500 Index rose 1.4 per cent as of 11:39 a.m. New York time.
The Stoxx Europe 600 Index rose 0.6 per cent.
The MSCI Asia Pacific Index rose 0.9 per cent.
The MSCI Emerging Market Index was little changed.
The Bloomberg Dollar Spot Index fell 0.3 per cent.
The euro climbed 0.2 per cent to US$1.187.
The British pound gained 0.1 per cent to US$1.3333.
The onshore yuan was little changed at 6.586 per dollar.
The Japanese yen was little changed at 104.54 per dollar.
The yield on 10-year Treasuries jumped two basis points to 0.87 per cent.
The yield on two-year Treasuries increased less than one basis point to 0.16 per cent.
Germany’s 10-year yield gained three basis points to -0.56 per cent.
Japan’s 10-year yield climbed one basis point to 0.025 per cent.
West Texas Intermediate crude surged 4.7 per cent to US$45.07 a barrel.
Brent crude climbed 1.6 per cent to US$47.845 a barrel.
Gold futures weakened 1.9 per cent to US$1,809.30 an ounce.
Global National: Jan. 27, 2021 | Pfizer seeks to stretch number of doses in COVID-19 vaccine – Global News
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- Global National: Jan. 27, 2021 | Pfizer seeks to stretch number of doses in COVID-19 vaccine Global News
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GameStop shares rally for another day, as total volume exceeds number of tradeable shares – The Globe and Mail
A battle between small investors mobilizing in online discussion groups and professional investors who traditionally dictate market moves is playing out among a number of formerly low-profile stocks, which are soaring for no discernable reason.
Amazingly, the small investors appear to be winning – so far.
In a previously unseen frenzy of trading that has attracted the attention of the White House and the Securities and Exchange Commission, the shares of video-game retailer GameStop Corp. surged to a fresh intraday high of US$380 on Wednesday, up as much 157 per cent during the day and marking an 1,800-per-cent increase over the past two weeks.
The gains comes as seemingly amateur investors mobilize in stock chatrooms to organize buying campaigns of stocks, not only to make quick profits but also in a bid to take on hedge funds and other money managers, some of whom are short-sellers who profit when share prices drop.
GameStop has emerged as the one of the most discussed and widely traded stocks in the world as individual investors increasingly show their collective power in the stock market, often with small bets, turning the tables on institutional investors that usually dominate stock trading. Other former sleepy stocks that largely traded without much fanfare are also emerging with sudden and mysterious bursts of their own.
BlackBerry Ltd. rose 32.7 per cent in New York, for a total gain of more than 160 per cent over the past five trading days. AMC Entertainment Holdings Inc., a U.S.-based movie theatre owner beset by few releases and closed cinemas, rose 301 per cent on Wednesday.
Michael Burry of Scion Capital, an early investor in the company, on Tuesday called the GameStop rally “unnatural, insane, and dangerous,” in a tweet.
The White House press secretary said that Janet Yellen, the U.S. Treasury Secretary, is monitoring the situation. The SEC said in a statement that it is “aware of and actively monitoring the on-going market volatility in the options and equities markets,” according to MarketWatch.
The stock market is now valuing GameStop at US$24-billion, up from just US$1.4-billion two weeks ago.
Equally baffling is the number of GameStop shares trading hands: Volume exceeded 90 million shares on Wednesday, easily eclipsing the number of tradeable shares and implying that amateur investors are simply flipping the stock in great quantities in the hope of scoring easy gains.
“This is why the definition of an efficient market is really, really elusive. It’s slippery,” said Laurence Booth, CIT chair in structured finance at Rotman School of Management at the University of Toronto.
“It doesn’t necessarily mean that [investors] are clever or fully informed. For whatever reason, they believe that the stock price is going up,” Mr. Booth said.
Some U.S. and Canadian online trading platforms offered by Robinhood, Charles Schwab, Royal Bank of Canada and Toronto Dominion Bank experienced brief outages owing to heavy trading activity. TD Ameritrade also halted some transactions.
GameStop’s remarkably swift rise to the world’s most heavily traded stock has little to do with any change in its fundamental performance. Earlier this month, the Texas-based company reported that total comparable store sales for the holiday period increased 4.8 per cent over the same nine-week period last year.
The company has suspended financial guidance owing to the uncertainties surrounding the pandemic. Analysts who cover the stock have an average price target (where they believe the shares will be trading within 12 months) of just US$11 – a fraction of Wednesday’s high point.
Instead, the frenetic activity appears to be driven by momentum-chasing investors congregating in online forums such as Reddit’s WallStreetBets, throwing dispersions on sophisticated Wall Street professionals, bragging about their success and proclaiming trades at ever-higher prices.
These chatroom investors appear particularly interested in stocks with a high level of interest among short-sellers, some of whom are complaining that they are being threatened and harassed.
Short-sellers borrow stocks and then sell them in anticipation that share prices will drop. If share prices rise, though, these investors face unlimited losses, forcing them to buy back the shares they had borrowed and sold – sending share prices even higher in what’s known as a short squeeze.
The pain among short-sellers is becoming plain to see. Melvin Capital, a hedge fund that recently received a US$3-billion capital infusion, closed out its short position in GameStop on Tuesday afternoon, according to CNBC.
Andrew Left of Citron Research, a short-seller who had previously argued that GameStop shares would fall from US$40 to US$20, said in a video post on Wednesday that he had covered his short sales at a 100-per-cent loss, even as he argued that GameStop shares will eventually drop sharply.
“But I have respect for the market,” Mr. Left said.
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Reddit community WallStreetBets squeezes short sellers – ABC News
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- Reddit community WallStreetBets squeezes short sellers ABC News
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