· Wall Street starts 2020 with new records on China stimulus, trade hopes
Stocks rose to all-time highs on Thursday, led by tech shares, as the strong rally in 2019 continued in the first trading day of the new year.
Wall Street’s major indexes notched record highs to open the new year on Thursday, as fresh economic stimulus from China added to optimism fueled by easing trade tensions and an improving global outlook.
The Dow Jones Industrial Average advanced 330.36 points, or 0.9% to 28,868.80 and notched its biggest one-day gain since Dec. 6. The S&P 500 closed 0.8% higher —marking its best performance since Dec. 12 — at3,257.85. The Nasdaq Composite gained 1.3% to end at 9,092.19 and had is best day since Oct. 11. The major averages hit their session highs in the final minutes of trading.
Sentiment was lifted Thursday after the People’s Bank of China lowered the amount of reserve cash the country’s banks must hold, which will put more money into the economy. This move will inject about 800 billion yuan in liquidity to the Chinese economy.
China’s central bank said on Wednesday it would cut the amount of cash that all banks must hold as reserves, the eighth such cut since early 2018. The move to inject fresh stimulus into the Chinese economy boosted equity markets around the globe.
The benchmark S&P 500 hit its 11th record high in 14 sessions and posted its largest daily percentage gain in three weeks. The Dow registered its biggest such gain in almost four weeks, and the Nasdaq its greatest in nearly three months.
Economic stimulus in China, along with the easing of trade tensions between Washington and Beijing, has bolstered optimism that the global economy will accelerate in 2020.
· Rally just getting started and stocks could gain more than 20% from here, chart analysis shows
The S&P 500 could surge in a powerful rally to 3,850, if stocks stage the same type of breakout they had after the last two similar downturns, according to technical research strategists at Bank of America Merrill Lynch.
The strategists said there should be a sustained breakout of about 25%, if the market’s move from 2018 to earlier this month was a cyclical consolidation, or bear market, like the ones in 2015 to 2016 and 2011 to 2012.
“History suggests that breakouts from these ranges should be powerful,” the strategists wrote in a note. On the S&P 500, the 3,063 level was the “bears’ last stand.”
· European stocks closed higher Thursday after U.S. President Donald Trump said that a phase one trade deal with China will be signed on January 15.
The pan-European Stoxx 600 closed provisionally up by 1%, with bank and technology shares leading the gains as all sectors and major bourses traded firmly in positive territory.
· Shares in Asia jumped in morning trade as stocks on Wall Street sailed to new all-time highs overnight.
South Korea’s Kospi gained 1.08% as shares of chipmaker SK Hynix surged about 3%. Chip stocks saw gains overnight stateside, with shares of companies such as Advanced Micro Devices and Micron Technology rising.
Meanwhile, Australia’s S&P/ASX 200 surged 1.22% in morning trade, with all the sectors in positive territory. The heavily weighted financial subindex gained about 1.4% as shares of Australia’s so-called Big Four banks saw gains. Australia and New Zealand Banking Group added 1.2%, Commonwealth Bank of Australia rose 1.46%, Westpac gained 1.53% and National Australia Bank advanced 1.14%.
Shares of Apple suppliers in the region will be watched on Friday, after the Cupertino-based tech giant hit $300 per share for the first time on Thursday.
Markets in Japan are closed on Friday for a market holiday.
Reference: CNBC, Reuters
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