US Stock Futures Rise Amid Troubling Coronavirus Numbers; Asian Markets Started Strongly For The Week
US stock futures rose in overnight trading on Sunday. Dow Jones futures rose 187 points along with S&P 500 futures and Nasdaq futures rose 0.7% and 0.5% respectively. This came even as coronavirus cases continue to soar in the US and global cases top 13 million. Across the US, Florida reported 15,299 new coronavirus cases on Sunday, the highest single-day totally for any US state since the pandemic began. Coronavirus cases worldwide are at 13.03 million.
The Dow Jones and S&P 500 are coming off two consecutive weeks of gains. Meanwhile, the strong rally in tech stocks pushed Nasdaq to a record high after three straight positive weeks. Among three indexes, the tech-centric Nasdaq outperformed, climbing 10.7% this month as FAANG stocks claimed new highs. Asian markets started trading higher today after positive sentiment from Wall Street spilled into the region. Chinese stock markets also continued their bull run.
The CSI 300- an index of large-cap stocks in Shanghai and Shenzhen, rose 2.3% at the time of writing. Goldman Sachs (GS Stock Report) last week predicted CSI 300 would rise another 15% in the coming few months. Meanwhile, Hong Kong’s Hang Seng Index gained 1.2%.
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Could The Coming Earnings Season Bring Lofty Stocks Down To Earth?
Major companies are about to reveal to investors how they fared during the second quarter as the coronavirus swept over the US. This time, there’s no sugarcoating it. Earnings for financial stocks take center stage this week. Among them are JPMorgan Chase (JPM Stock Report), Wells Fargo (WFC Stock Report), Goldman Sachs, Bank of America (BAC Stock Report) and BlackRock (BLK Stock Report).
Banks won’t be the only sector in the earnings spotlight. Netflix (NFLX Stock Report), Pepsi (PEP Stock Report), Delta (DAL Stock Report), and United Health (UNH Stock Report) are also due to report their latest results. Many analysts are estimating that Netflix is expected to increase in subscribers, while Delta’s cash burn rate is also one of the main focus and could serve as a rough guide for airline stocks in the coming weeks.
If there is a sense from this earnings season that confidence in a V-shaped recovery for profits is misplaced. The impact would be the hardest for companies with a relatively high valuation but weak balance sheets. Also, companies whose business models depend on a full resumption of economic activity is likely to take a hard hit this week. Hopes for V-shaped recovery in earnings have been the main driver for overall markets to rebound so quickly. It may be best for investors to brace themselves in the coming few weeks as we enter the earnings season.
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China’s GDP Report Growth This Thursday
The stock market rally in China led traders to look for positive signs in China’s GDP data. Many experts believe that China’s economy will return to year on year growth in the second quarter after the world’s second-largest economy’s GDP fell 6.8% in the first quarter.
Last week, mainland Chinese equities had their best week in five years as investors piled into a rally bolstered by signs of economic recovery and support from their state media. That said, the country’s stock market has risen 18% in 2020, while benchmarks in Europe and the US remain down on the year. Evidence of a recovery in China would come at a time when Hong Kong, the semi-autonomous region, has been experiencing a new wave of cases over the past week.
Gold Price To Hover Around $1,800 This Week; Or Can It Go Higher?
Gold prices hovered around $1,800 last week. This move is mainly a result of the Fed’s loose monetary policy due to the coronavirus. The ongoing geopolitical tensions between the US and China also contributed to gold’s ascent. Looking back at the past decade, gold prices have been rallying since the last quarter of 2018. It is the longest quarterly run since the 2007 financial crisis. The question here is, will it consolidate after last week’s stronghold after the gold price reached a historic high?
Judging from the momentum, it is reasonable to assume that the gold price may continue its momentum for another few quarters. Of course, the gain in the near-term would very much depend on the Covid-19 situation. Many are assuming that a vaccine is unlikely to be available any time soon. But then you have seen the optimism in mainland Chinese stocks. Yet the Chinese investors are also bullish on gold and silver. Will the gold price stay at its current levels or see more gains in the near-term?