Treasury Secretary nominee Janet Yellen testimony to the US Senate overnight re-assured markets that policy is on track to support the economy. Bond yields eased and the US dollar slipped, despite her rejection of any weak dollar policy. Share investors’ focussed on her pleas to target small businesses and the unemployed for fiscal support, lifting technology stocks and smaller companies.
The testimony helped short circuit the virus concerns that weighed on European trading. Germany re-instituted lockdown measures in a widely anticipated move, and European stocks edged lower. Oil trading reflected the sentiment swing, with a soggy European session giving way o gains in American trading.
The gains in stocks were further fuelled by some solid company earnings reports. Goldman Sachs and Bank of America continued the trend set by Citibank and JP Morgan on Friday, posting earnings that smashed consensus forecasts. Netflix reported after market. Its shares moved higher in out of hours trading after it reported 8.5 million new subscribers. Investors appeared willing to forgive its weaker earnings in light of this stronger than expected growth.
Tonight brings results from US Bancorp, Bank of New York Melon, Morgan Stanley, consumer goods group Procter and Gamble and United Health, among others.
Index futures indicate a mildly positive start to trading in Japan and Australia, but Hong Kong futures are down slightly after yesterday’s spectacular gains. Authorities in China are expected to hold longer term rates steady at current levels today.