US stock markets started the week with a lacklustre performance, with the S&P 500 erasing an earlier gain of 0.9% to end in the red at -0.4% (3,647), together with the Dow Jones Industrial Average -0.6% (29,861). The tech heavy Nasdaq 100 and domestic US small caps Russell 2000 fared better, with gains of 0.7% and 0.1%. The Nasdaq 100 and Russell 2000 closed at 12,462 and 1,913 respectively.
Yesterday's S&P sector performance scorecard painted a clearer picture of the cyclical/value-oriented stocks' underperformance, as financials, industrials and materials recorded losses between -1.2% to -1.3%, while the worst performer was the energy sector (at -3.5%), despite a gain of +0.9% (46.99) in light crude oil futures. Outperformers went consumer discretionary +0.4% and information technology +0.4%.
The headwind for the cyclical/value stocks was an acknowledgement from the New York City mayor that the city faced the risk of an imminent full shutdown, due to a significant rise in coronavirus cases. Within the S&P sectors; the performance of growth proxies are still robust, as semiconductors & equipment industry within information technology recorded a gain of +1.4%, and the leisure equipment & products industry within consumer discretionary advanced by +1.3%. Hence, the probability of a medium-term (multi-week) corrective decline is low at this juncture for the major US stock indices.
On the US political front, several media reports had indicated that the US$908 billion bipartisan fiscal bill was going to be split into two bills; one bill amount of US$748 billion that excludes state/local aid and liability protection, and a second bill for US$160 billion that includes both contents. Both Democrats and Republican leaders remained in negotiations. Joe Biden has officially clinched the presidency after the electoral college confirmed his victory, and the next step is for the Congress to acknowledge and approve the results. In a nutshell, the options for President Trump to overturn the results are running out.
China's big tech stocks took a beating yesterday, as China’s antitrust watchdog fined Alibaba Group and a Tencent unit over a year-old acquisitions deal, which signalled to the market that regulators are still holding a tight grip on the operations of big tech firms that may hinder thei growth potential. Hong Kong-listed Alibaba and Tencent shed -2.6% and 2.9% respectively, to close at a five-day low yesterday.
In today’s Asia session, China big tech stocks continued to see further selling pressure: Alibaba (-2.1%), Tencent (-1.1%), JD.com (-3.2%) and Meituan (-1.5%) are currently underperforming the broader Hang Seng TECH index (-0.15%).