Connect with us

Economy

Global rally fades, but investors' hopes remain for economy – The Tri-City News

Published

 on


Shares were mostly higher Wednesday in Asia after a worldwide rally spurred by hopes that a COVID-19 vaccine will help the global economy return to normal.

Benchmarks advanced in Tokyo, Seoul and Sydney but edged lower in Hong Kong and Shanghai, where new Chinese regulations focused on technology companies prompted selling in that sector.

article continues below

The proposed regulations issued Monday for public comment give guidelines on how China’s 2008 anti-monopoly law will be applied to internet companies. The announcement gave no indication operators are accused of wrongdoing but cited areas where regulators might look for problems including sharing of information and alliances or pricing services below cost to keep out new competitors.

As of midday, e-commerce giant Alibaba’s shares had fallen 7.3% and Tencent, owner of the popular WeChat social media platform, had lost 5% and online retailer JD.com was down 6.2%.

In Hong Kong, the Hang Seng lost 0.2% to 26,241.52 and the Shanghai Composite index declined 0.2% to 3,356.88.

But other regional markets were mostly higher. Japan’s Nikkei 225 index gained 1.2% to 25,197.68 and the S&P/ASX 200 advanced 1.3% to 6,419.50. South Korea’s Kospi rose 0.7% to 2,470.11.

On Wall Street, stocks downshifted on Tuesday after a powerful worldwide rally the day before. It was the second straight day that rising hopes for a COVID-19 vaccine pushed investors to reorder which stocks they see winning and losing.

Treasury yields and oil held onto their big gains from a day earlier or added some more amid strengthened confidence in the economy.

The S&P 500 dipped 0.1% to 3,545.53, after erasing most of an early loss. The Dow Jones Industrial Average gained 0.9% to 29,420.92 and the Nasdaq composite dropped 1.4%, to 11,553.86.

The flashpoint for all the moves was Monday’s announcement from Pfizer that a potential COVID-19 vaccine it’s developing with German partner BioNTech may be 90% effective, based on early but incomplete test results.

Stocks of smaller U.S. companies, which tend to move more with expectations for the economy than their bigger counterparts, rallied again. The Russell 2000 index of small-cap stocks gained 1.9% to 1,737.01, finally returning to where it was in January. It’s just 0.2% below its record high set in 2018.

Several areas of the market that have been beaten down through the pandemic and whose low prices make them look like potentially better values led the way. Energy stocks in the S&P 500 rose 2.5% for the best gain among the 11 sectors that make up the index, for example, though they’re still down nearly 44% for 2020.

Big Tech stocks that carried the stock market through the pandemic, meanwhile, are suddenly facing more scrutiny for their high prices. Their stocks soared through 2020 on expectations they’ll continue to thrive if the economy is in lockdown mode. But that’s left their prices looking expensive even after accounting for their huge profits.

Amazon, which is one of those Big Tech stay-at-home winners, fell 3.5%. It also is facing antitrust charges filed by European Union regulators on Tuesday that accuse it of using its access to data to gain an unfair advantage over merchants using its platform.

Microsoft fell 3.4%, and Facebook lost 2.3%. Those drops have outsized effects on the S&P 500 because they’re some of the largest companies in the index by market value.

The S&P 500 is already up 8.4% in November, helped by hopes for a coronavirus vaccine and clearing uncertainty about U.S. leadership after Democrat Joe Biden clinched the last of the 270 electoral votes needed to become the next president. Republicans, meanwhile, appear likely to keep control of the Senate.

Some analysts are speaking of a “Goldilocks” scenario where low tax rates and other pro-business policies remain while a more stable and predictable set of policies comes out of the White House.

Many risks remain, and the biggest may be whether investors have become too convinced about a potential COVID-19 vaccine.

Coronavirus counts continue to surge at worrying rates across the U.S. and Europe. prompting some governments to restore restrictions on businesses.

“The biggest downside risk remains COVID and how severe this wave is going to be,” Craig Erlam of Oanda said in a commentary. “COVID is impossible to ignore, particularly with cases soaring once again and deaths on the rise.”

With fresh help for the U.S. economy from Congress still undecided, pressure is on central banks to step up support for markets.

“In fact, the end of this year could provide the perfect cocktail of widespread monetary and fiscal easing, combined with one or more vaccines,” he said.

President Donald Trump’s refusal to concede and co-operate with Biden’s transition team is another source of uncertainty, especially as some Republicans including Senate Majority Leader Mitch McConnell rally behind Trump’s efforts to fight the election results.

Still, optimism remains across markets.

The yield on the 10-year Treasury rose to 0.98% from 0.95%, close to its highest level since March.

Benchmark U.S. crude oil gained 33 cents to $41.69 per barrel in electronic trading on the New York Mercantile Exchange. It rose 2.7% to settle at $41.36 per barrel on Tuesday. Brent crude, the international standard, picked up 28 cents to $43.89 per barrel.

In currency dealings, the dollar weakened to 105.02 Japanese yen from 105.31 yen late Tuesday. The euro rose to $1.1825 from $1.1820.

___

AP Business Writer Joe McDonald contributed.

Let’s block ads! (Why?)



Source link

Continue Reading

Economy

Bank of Canada: Vaccine Could Trigger Swift Economic Rebound – Voice of America

Published

 on


OTTAWA, ONTARIO – Canada’s economy could rebound faster than expected if consumer spending jumps in the wake of a successful coronavirus vaccination effort, Bank of Canada Governor Tiff Macklem said Thursday.

On the other hand, if the economy weakens amid a second wave of infections, Macklem indicated the central bank could, if necessary, cut already record-low interest rates.

In late October, the bank said it assumed a vaccine would not be widely available until mid-2022. Since then, several manufacturers have announced potential vaccines that could be distributed starting early next year.

“It is possible, especially when there is a vaccine, that households will decide to spend more than we have forecast, and if that happens the economy will rebound more quickly,” Macklem said in response to questions from the House of Commons finance committee. He described the news about vaccines as promising.

In late October, the bank forecast the economy would not fully recover until sometime in 2023, a forecast Macklem repeated in his opening remarks.

The path to recovery still faces risks, he said. Earlier this year, the bank slashed its key interest rate to 0.25%.

“We could potentially lower the effective lower bound, even without going negative. It’s at 25 basis points. It could be a little bit lower,” Macklem said, repeating that negative interest rates would not be helpful.

The U.S. Federal Reserve has a target for its key rate of 0 to 0.25%. The Reserve Bank of Australia this month cut its policy rate to 0.1%.

Some other central banks also have benchmark rates that are less than 0.25%, such as the European Central Bank and the Bank of England.

“We want to be very clear – Canadians can be confident that borrowing costs are going to remain very low for a long time,” Macklem said.

Let’s block ads! (Why?)



Source link

Continue Reading

Economy

Coronavirus vaccine could help economy recover faster than expected

Published

 on

Canada’s economy could rebound faster than expected if consumer spending jumps in the wake of a successful coronavirus vaccination effort, Bank of Canada Governor Tiff Macklem said on Thursday.

On the other hand, if the economy weakens amid a second wave of infections, Macklem indicated the central bank could if necessary cut already record low interest rates.

In late October, the bank said it assumed a vaccine would not be widely available until mid-2022. Since then, several manufacturers have announced potential vaccines that could be distributed starting early next year.

“It is possible, especially when there is a vaccine, that households will decide to spend more than we have forecast and if that happens the economy will rebound more quickly,” Macklem said in response to questions from the House of Commons finance committee. He described the news about vaccines as promising.

In late October, the bank forecast the economy would not fully recover until some time in 2023, a forecast Macklem repeated in his opening remarks.

The path to recovery still faced risks, he said. Earlier this year the bank slashed its key interest rate to 0.25 per cent.

“We could potentially lower the effective lower bound, even without going negative. It’s at 25 basis points, it could be a little bit lower,” Macklem said, repeating that negative interest rates would not be helpful.

The U.S. Federal Reserve has a target for its key rate of 0 to 0.25 per cent. The Reserve Bank of Australia this month cut its policy rate to 0.1 per cent.

Some other central banks also have benchmark rate that are less than 0.25 per cent, such as the European Central Bank and the Bank of England.

“We want to be very clear – Canadians can be confident that borrowing costs are going to remain very low for a long time,” Macklem said.

 

Source: – Global News

Source link

Continue Reading

Economy

As economy struggles, Fed weighs boosting bond purchases – Investment Executive

Published

 on


The Fed since June has been buying $120 billion in bonds each month to keep downward pressure on long-term interest rates as a way of giving the economy a boost as it struggles to emerge from a deep recession.

The purchases have included $80 billion a month in Treasury bonds and $40 billion in mortgage-backed securities.

With the economy showing signs of slowing in the face a resurgence in coronavirus cases and a return to shutdowns in some areas, there has been market speculation that the Fed could decide to boost the size of its monthly purchases.

The minutes show that while no decision was taken on what to do or when, Fed officials were keeping their options open. Some analysts believe the Fed will make an announcement on boosting the bond purchase program at its next meeting on Dec. 15-16, especially if there has been no movement by Congress to provide more economic relief to individuals and businesses.

The minutes said that many Fed officials “judged that asset purchases helped provide insurance against risks that might reemerge in financial markets in an environment of high uncertainty.”

Concern has been growing among economists that the economy is slowing after an initial rebound this summer and could even topple into a double-dip recession in the early part of 2021 if Congress does not replenish expiring support programs.

At the White House Wednesday, Peter Navarro, one of President Donald Trump’s economic advisers, told reporters that a “sober” reading of the economic recovery shows “we are facing … a chasm ahead for millions of Americans unless there can be a bipartisan” deal to provide further economic relief.

The minutes released Wednesday covered the Fed’s Nov. 4-5 meeting, held just after the November elections, and were released with the customary lag of three weeks.

At the meeting, the central bank kept its benchmark interest rate at a record low near zero and signalled that it was prepared to do more if needed to support the economy.

A multitrillion-dollar stimulus effort enacted in the spring has helped support millions of Americans who have been thrown out of work and provided further assistance to struggling individuals and businesses.

But many of those programs have expired and jobless benefits are due to run out for millions of Americans by the end of this year.

Federal Reserve Chairman Jerome Powell had said at a news conference following the two-day meeting that Fed officials had discussed whether and how a bond buying program might be altered to provide more economic support.

In addition to increasing the size of the program, the Fed could decide to alter the composition of the bonds purchases to focus on buying long-term securities as a way of putting added downward pressure on long-term rates.

Let’s block ads! (Why?)



Source link

Continue Reading

Trending