The US stock market started 2021 on a weak footing, against a backdrop of rising coronavirus infection cases in the US and Europe, as well as a nationwide lockdown implemented in the UK until 15 February, to contain the ongoing spread of a mutated strain of Covid-19.
The S&P 500 shed -1.48%, its worst first day of the year performance since 2016, with similar negative magnitudes for the Nasdaq 100 (-1.50%), the Dow Jones (-1.25%) and the Russell 2000 (-1.47%). In addition, all S&P sectors were all in the red except for energy, which managed to squeeze out a meagre gain of +0.13%; underperformers were industrials (-2.55%), utilities (-2.60%) and real estate (-3.29%).
Interestingly, despite the sell-off in the broader US stock market, there were some silver linings. The leader of the electric vehicle (EV) space, Tesla, soared by +3.42% to close at another record a high at 729.77, after it missed its 2020 delivery target by only 450 vehicles, just shy of the 500,000 target set by CEO Elon Musk. After its inclusion into the S&P 500 on 21 December last year, Tesla has rallied by 12.3%, making it the fifth-largest weighted component stock in the S&P 500. The share price of NIO, a major Chinese EV maker listed on the NYSE, also surged, by +9.75%, after it reported record annual delivery for 2020, up 112% year-over-year to 43,728 vehicles.
Global growth proxies such as semiconductor stocks remained resilient. The PHLX Semiconductor ETF outperformed the S&P 500 with a minor loss of -0.42%, and CME copper futures rose by +1.03%.
Key Asian benchmark stock indices are currently standng firm and not catching the 'flu bug from the US. Japan’s Nikkei 225 lost just -0.09% (to 27,232), South Korea’s KOSPI 200 fell -0.01% (399.92), Hong Kong’s Hang Seng Index lost -0.17% (27,430), the Hang Seng TECH Index dropped -0.60% (8,439), and China’s CSI 300 rose +0.83% (5,311). It appears that yesterday’s sell-off in the major US stock indices is not likely to kick-start a medium-term downtrend.
Chart of the day – iShares PHLX Semiconductor ETF
The iShares PHLX Semiconductor ETF is poised for a potential bullish breakout.
Source: CMC Markets
Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.