US Stock Futures Rise Ahead Of Busy Earnings Week
The US stock index futures rose ahead of the week packed with earnings. As of 6.34 am E.T., the Dow Jones is up 0.51%, with the S&P 500 and Nasdaq Composite indexes both rose 0.59% and 1.12% respectively. All stock indexes edged higher from the level seen on early Sunday evenings. The moves in the futures market came after gold prices surged to new highs, as tensions between the U.S. and China continued to escalate.
Escalation Of The U.S.-China Tensions, Asian Equities Picking Up
Investors were rattled by the latest tensions between the U.S. and China. This came after Beijing ordered the U.S. embassy to close on Friday in a tit-for-tat move, after Washington instructed China’s consulate in Houston to cease operations. The Trump administration ordered the closure after it claimed that it has reasons to believe that the consulate was a hub of spy activity by the Chinese Communist Party. The relationship between the two countries has become more fragile as a result of the coronavirus. This was further escalated after Hong Kong’s new national security law. The conflict between the two superpowers seems to be pointing towards a point of no return.
Global equities fell last week. Most indices traded lower on Friday’s closing bells. Both U.S. and mainland Chinese stocks fell last week. But as the week gets going, most Asian equities traded higher. Mainland Chinese stocks rebounded as China’s June industrial profit soared 11.5% year-on-year.
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Over the weekend, the consensus within the White House appears to be a focus on passing a smaller stimulus bill. This aim will still be on getting the benefits to millions of Americans in a timely manner. And there seems to be slight change of the arrangement of the benefits. Instead of $600 per week under the CARES Act, the government proposed an amount of 70% of a person’s average wage before the Covid-19 crisis.
Other stimulus on the plate are back-to-work credits, school funding and widespread liability insurance for restaurants, hotels, hospitals and universities. In addition, the GOP bill which Senate Majority Leader Mitch McConnell plans to roll out on Monday, is expected to include all of the above. But it will be a broader, $1 trillion package that covers other priorities as well. That includes $25 billion in coronavirus testing, stimulus checks for Americans who make less than $75k per year and the possible extension of the Paycheck Protection Program.
Gold Prices Reach Record Highs Again
Meanwhile, gold prices soared to a new record on Monday during Asian trading hours. Spot gold traded as high as $1,943.9275 before paring gains to change hands at around $1,931.76. Those levels eclipsed the previous record high price set in September 2011.
Gold prices are soaring at least in part because of the responses to Covid-19. Central banks have been injecting a lot of liquidity into the systems and governments have been providing stimulus after stimulus. As a result, investors and the general public are flocking to buy more gold to protect themselves from inflation. After all, there’s only so much gold out there in the market. And extracting it from the earth takes time. As such, gold tends to go up in value when the value of dollar drops.
Big Tech Companies Are Reporting Their Earnings
This week will be an interesting week to watch as some of the tech giants are disclosing their earnings during the second quarter. Wall Street is closely monitoring the space to see whether the results justify the incredible rally over the past few months. The second-quarter earnings continue to wind down as the big names to report include Facebook (FB Stock Report), Apple (AAPL Stock Report), Amazon (AMZN Stock Report), Shopify (SHOP Stock Report), and Spotify (SPOT Stock Report). These are due out during the second half of the week. So, whether it is the terms of coronavirus stimulus plans, the surge in gold prices, tensions between the two economic superpowers, or earnings, there’s a lot to digest this week.