The Dow Jones Industrial Average rose 160.35 points, or 0.57 percent, to 28,492.27. The S&P 500 increased 5.82 points, or 0.17 percent, to 3,484.55. The Nasdaq Composite Index fell 39.72 points, or 0.34 percent, to 11,625.34.
Eight of the 11 primary S&P 500 sectors climbed, with financials and real estate up 1.7 percent and 1.4 percent, respectively, outpacing the rest. Communication services dipped 1.3 percent, the worst-performing group.
Meanwhile, U.S.-listed Chinese companies traded mostly lower, with eight of the top 10 stocks by weight in the S&P U.S. Listed China 50 index ending the day on a downbeat note.
Fed Chairman Jerome Powell announced on Thursday that the central bank will seek to achieve inflation that averages 2 percent over time, a new strategy for carrying out monetary policy to help fight the COVID-19 pandemic and boost economic recovery.
“Therefore, following periods when inflation has been running below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time,” Powell said in remarks to the Kansas City Fed’s annual Jackson Hole research conference, which is held virtually this year because of the pandemic.
“This is a subtle change, made because the old way of conducting policy did not work,” Chris Low, chief economist at FHN Financial, said in a note on Thursday, adding the move indicated “the era of preemptive monetary policy is over.”
On the data front, the U.S. economy contracted at an annual rate of 31.7 percent in the second quarter amid mounting COVID-19 fallout, the U.S. Commerce Department reported Thursday.
Moreover, U.S. initial jobless claims, a rough way to measure layoffs, came in at 1 million in the week ending Aug. 22, following claims of 1.1 million in the prior week, said the Department of Labor. The reading was roughly in line with market expectations.
Buffett-following investment trust to list in London – TheChronicleHerald.ca
LONDON (Reuters) – An investment trust following the principles of veteran U.S. investor Warren Buffett is to list in London, the trust said on Friday.
Buffettology Smaller Companies Investment Trust intends to raise a minimum of 100 million pounds ($127.52 million) via an initial public offering on the London Stock Exchange, it said in a statement.
The trust will mainly invest in companies listed or traded in Britain, through a portfolio of 30-50 companies with market
capitalisations from 20-500 million pounds.
Sanford DeLand will be the trust’s investment manager, led by Keith Ashworth-Lord, CIO of Sanford DeLand Asset Management.
Sanford DeLand manages around 1.4 billion pounds across two open-ended funds.
“The UK small cap market offers excellent investment
opportunities to experienced managers who know what to look for and have the freedom to take a long-term view,” Ashworth-Lord said.
(Reporting by Carolyn Cohn; Editing by Rachel Armstrong)
China expands investment scope for foreign investors under combined scheme – TheChronicleHerald.ca
By Luoyan Liu and Meg Shen
SHANGHAI/BEIJING (Reuters) – China moved to further ease foreign access to its capital markets on Friday, officially combining two major inbound investment schemes and broadening the scope for foreign institutional investment.
The finalised rules, published by The China Securities Regulatory Commission (CSRC), the central bank and the foreign exchange regulator, combine the Qualified Foreign Institutional Investor (QFII) scheme and its yuan-denominated sibling, RQFII. The schemes channel foreign capital into Chinese stocks and bonds.
The new rules, which will take effect on Nov. 1, would also expand investment scope under the combined scheme.
The rule changes “will fundamentally relieve major bottlenecks for foreign institutional investors seeking to invest in China” said Thomas Fang, head of China Global Markets at UBS.
The regulations “have the potential to not only galvanize investor interests in China, but also broaden (the) investor base in using financial and hedging instruments in China,” Fang said.
China is accelerating reforms and the opening-up of its capital markets as part of efforts to promote global use of the yuan currency while trade and diplomatic ties with the United States remain strained.
The announcement coincides with FTSE’s decision earlier in the day to include Chinese government bonds in its flagship World Government Bond Index.
The rules also lower the threshold for overseas applicants and simplify the vetting process.
Investors will be allowed to buy securities traded on Beijing’s New Third Board and invest in private funds or conduct bond repurchase transactions.
In addition, foreign institutions will also have access to derivatives, including financial futures, commodity futures and options, according to the new rules.
“The move will encourage more medium- and long-term funds, including hedge funds and alternative investment funds, to enter the Chinese market directly,” said Fang at UBS.
The draft rules were published in January 2019.
(Additional Reporting by Samuel Shen; Editing by Alex Richardson)
U.S. core capital goods orders beat expectations; business investment rebounding – TheChronicleHerald.ca
By Lucia Mutikani
WASHINGTON (Reuters) – New orders for key U.S.-made capital goods increased more than expected in August and demand for the prior month was stronger than previously estimated, suggesting a rebound in business spending on equipment was underway after a prolonged slump.
The upbeat report from the Commerce Department on Friday, however, did not change views that the economy’s recovery from the COVID-19 recession was slowing as government money to help businesses and tens of millions of unemployed Americans runs out. New coronavirus cases are rising in some parts of the country. That could crimp consumer spending, with retail sales already slowing.
Federal Reserve Chair Jerome Powell this week stressed the need for more fiscal stimulus, telling lawmakers on Thursday that it could make the difference between continued recovery and a much slower economic slog. Another rescue package appears unlikely before the Nov. 3 presidential election.
Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 1.8% last month, the Commerce Department said. Data for July was revised up to show these so-called core capital goods orders increasing 2.5% instead of 1.9% as previously estimated.
Economists polled by Reuters had forecast core capital goods orders gaining 0.5% in August.
Core capital goods orders last month were boosted by increased demand for machinery, primary metals, computers and electronic products. But orders for fabricated metal products and electrical equipment, appliances and components fell.
U.S. stocks fell. The dollar was higher against a basket of currencies. U.S. Treasury prices rose.
STRONG THIRD QUARTER EXPECTED
Shipments of core capital goods increased 1.5% last month. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement. They advanced 2.8% in July. Business investment tumbled at a record 26% annualized rate in the second quarter, with spending on equipment collapsing at an all-time pace of 35.9%. Investment in equipment has contracted for five straight quarters.
Economic activity rebounded sharply over the summer as businesses reopened after mandatory closures in mid-March to slow the spread of the coronavirus. Gross domestic product is expected to rebound at as much as a record 32% annualized rate in the third quarter after tumbling at a 31.7% rate in the April-June period, the worst performance since the government started keeping records in 1947.
But fading fiscal stimulus is casting a cloud over growth prospects for the fourth quarter. Goldman Sachs on Wednesday cut its fourth-quarter GDP growth estimate to a 3% rate from a 6% pace, citing “lack of further fiscal support.”
Orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, rose 0.4% in August after jumping 11.7% in July. Durable goods orders were supported by a 0.5% rise in orders for transportation equipment, though demand for motor vehicles and defense aircraft eased.
There were no orders for civilian aircraft reported for the second straight month in August.
Boeing has struggled with cancellations as airlines grapple with sharply reduced demand for air travel because of the pandemic. The grounding of Boeing’s best-selling 737 MAX jets since March 2019 after two crashes in Indonesia and Ethiopia has also weighed on the company.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)
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