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Broad-based gains seen in equity markets

Gains in US equities continue to accelerate as the market intensified its focus upon the European Central Bank (ECB) meeting decision due today.

US Trader
Source: Bloomberg

The S&P 500 rose by a significant 1.32% after the subdued gains printed at the start of the week. Prices were propelled to a fresh all-time high of 2241.63. Likewise for the DJIA, prices peaked above 19500 to a new all-time high of 19549.62.

For the more comprehensive S&P 500, Wednesday had also been the strongest percentage gain recorded since 7 November’s 2.22% rise when the FBI cleared Democratic Nominee Hillary Clinton ahead of the US Presidential Election.

Notably, the pickup in equities on the S&P 500 index on Wednesday had been a broad based one. While the telecoms sector retained the lead, the IT sector had surprisingly made a significant recovery to come in second with a 1.90% gain. Even the energy sector resumed in black despite WTI futures dipping below $50 per barrel overnight. Healthcare had, however, remained pressured, down 0.82% on Wednesday and remains the only sector with year-to-date losses of 6.06%. A general improvement in the sentiment with regards to the outlook of the US economy and the year-end seasonal factor could be driving this move.

Additionally, the gains in equities midweek could also be attributed to the easing of bond selloffs, sparking buying of bond-like, dividend-yielding stocks. With less than four months until the expiry of the current quanitative easing (QE) programme, the market is looking to the ECB to inject another boost to the market by extending the programme beyond March.

Asian markets are set to sustain this wave of optimism with early movers including the Nikkei 225 and KOSPI already extending gains beyond 1.0%. It is no surprise to find the ASX 200 up 1.10% with financials and materials leading gains on the back of the bond recovery and higher metal prices respectively. Nevertheless, the market would still be watching for China’s November trade data due ahead of the ECB interest rate announcement today where an improvement has been expected.

Separately, Japan’s Q3 gross domestic product (GDP) arrived this morning at 0.3% quarter-on-quarter (seasonally adjusted), down from the 0.5% preliminary estimate, attributed to a drop in business spending and private inventories. The market had however largely brushed off the data with USD/JPY little changed post-release. 

 

Yesterday: S&P 500 +1.32%; DJIA +1.55%; DAX +1.96%; FTSE +1.81%

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