The US stock market started the week on a positive note after it resumed trading from a public holiday on Monday. The technology and small cap-related benchmark indices outperformed, as the Nasdaq 100 rallied by +1.50% (12,996) and Russell 2000 by +1.32% (2,151).
The S&P 500 gained +0.8% (3798) and a smaller gain of +0.4% was seen in the Dow Jones Industrial Average (30,930). In addition, the high-flying Russell 2000 had recorded an average daily gain of around +0.9% since 6 January.
S&P sectors recorded a mix of leadership from value and growth-related stocks, with outperformance in energy (+2.08%), communication services (+1.87%) and information technology (+1.31%).
Semiconductors, a proxy for continued to soar as the iShares PHLX Semiconductor ETF recorded a stellar gain of +3.43% (420.00), with another fresh all-time high close. Financials’ modest gain of +0.4% has been restrained by negative reactions to earnings reports from Bank of America (-0.7%) and Goldman Sachs (-2.3%), a typical "buy the rumour, sell the fact" scenario. Overall, the medium-term impulsive bullish phase for US stock indices remain intact at this juncture.
Incoming US treasury secretary Janet Yellen, a former Federal Reserve chief, has asserted that it's time to "act big" on fiscal stimulus, which suggested that there is more potential fiscal 'bazooka' to come in the coming months, if the US economy continues to deteriorate after the latest proposed US$1.9 trillion fiscal package by President-elect Biden. Also, Yellen commented that the Biden administration will not repeal the 2017 tax law while the economy battles with the pandemic. It was a dovish and comforting statement from a former Fed chair for the risk-on herd.
On the future US-China relationship, Yellen hinted that the incoming Biden administration is likely to maintain Trump’s hawkish stance towards China and is prepared to use the full array of tools to address actions such as “dumping products, erecting trade barriers and giving illegal subsides to corporations”.
So far, Yellen’s negative cold-war like comments on the future path of US-China relations has not created a negative feedback loop into Asian stock markets in today’s morning session. Interestingly, most of the Asian benchmark stock indices continued to maintain the medium-term upward trajectory, as positive momentum factors prevail. Hong Kong’s Hang Seng index is up +1.14% (to 29,900), the Hang Seng TECH (a composite of China's big tech stocks) is higher by +3.39% (to 9,691), another intraday fresh all-time high, China’s CSI 300 is up +0.90% (5,486), South Korea’s KOSPI 200 is up +0.60% (423.89), Australia’s ASX 200 is +0.64% stronger (6,785) while Singapore’s STI is almost unchanged (2,994) and Japan’s Nikkei 225 underperformed by -0.45% (28,504).