The US stock market ended yesterday session with positive gains seen almost across the board with the exception of the S&P energy and industrials sectors that shed around -0.2%. Top performers were health care (+1.7%), financials (+1.2%) and consumer staples (+1.2%).

Despite yesterday positive daily performance, key benchmark US stock indices had recorded their worst monthly performance since March 2020 where the S&P 500 and Nasdaq 100 tumbled by -3.9% and -5.7% in September respectively.

The USD dollar inched down lower by -0.07% against the major currencies as measured by the US Dollar Index but continued to remain above a key short-term support at 93.50. Gold futures (COMEX) declined by – 0.6%.

On the economic front, the ADP Employment Change Report for September, the Chicago PMI for September and Pending Home Sales report for August each came in stronger than expected. However, latest economic development in the US has painted a different picture that indicated that the positive after effects from the current fiscal and monetary stimulus policies have started to wane. Tens thousands of job cuts were announced by blue-chip firms; Walt Disney, Allstate Corp and Goldman Sachs within a 24-hour span.

Trading is likely to be light in today’s Asian session as China, Taiwan, Hong Kong and South Korea will be closed for holidays. Also, China has started its “Golden Week”, a week long holiday till 07 October 2020.

3 Things To Look Forward

Germany’s Markit Manufacturing PMI for Sep (final); its preliminary data came in at 56.6 over 52.2 recorded in August. If the final data is the same, it will mark the third consecutive month of an increase in growth seen in manufacturing activities in Germany since July 2020.

Germany’s Markit Services PMI for Sep (final); its preliminary data came in at 49.1, below 52.5 recorded in August. If the final data is the same, it will indicate weakness in the consumer related activities where the services sector had contracted for the first time after two months of consecutive growth seen in July and August. An indication that Germany is facing an uneven path of economic recovery where more fiscal and monetary stimulus policies may be needed.

US’s Personal Spending for August; the rate of momentum for US consumers spending had started to slowdown since May 2020 figure of 8.5% month-on-month. Market consensus is set at 0.7% month-on-month for August, down from 1.9% month-on-month recorded in July.

Chart of the day – Germany DAX continues to hover above 12300 key support


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