Stocks Climb to Records With Tech Leading Advance

US stocks notched fresh records, with tech shares in the lead as investors snapped up work-from-home winners. The S&P 500 rose by 0.75% to 3,526.65 while Dow Jones was up 215.61 points (0.76%) to 28,645.66.

Brainard Says US Economy Still Needs Fiscal, Monetary Help

Federal Reserve Governor Lael Brainard said the US economy faces “considerable uncertainty” in the months ahead and called for continued support from both the central bank and fiscal policy makers to help the country recover from the coronavirus pandemic. “Fiscal support will remain essential to sustaining many families and businesses,” Brainard said. In coming months, it will be important for monetary policy to pivot from stabilization to accommodation.

Manufacturing in US Expands at Fastest Pace Since Late 2018

US manufacturing expanded in August at the fastest pace since late 2018, powered by growth in new orders that are a bright spot in an otherwise struggling economy. A gauge of factory activity increased to 56 during the month from 54.2 in July, Institute for Supply Management data showed. Improved factory activity, along with strength in housing and auto sales, suggest the fledgling recovery is beginning to broaden.

Euro-area Inflation Turns Negative in Worrying Sign for ECB

Consumer prices in the 19-nation euro area are falling for the first time in four years, highlighting that a recent rebound in economic activity hasn’t managed to offset the pandemic’s profound impact on demand. The inflation rate came in at -0.2%, missing economists’ median estimate for a reading of +0.2%. Core inflation hit a record low, in part dragged lower by discounting during summer sales.

UK Manufacturing Output Expands at Fastest Pace in Six Years

UK factory output expanded at the quickest rate in more than six years as firms ramped up operations following the nationwide Covid-19 lockdown. IHS Markit’s measure of production posted its highest reading since May 2014. The overall manufacturing Purchasing Managers Index climbed to 55.2 in August, the highest in more than two years. New orders increased the most since 2017, driven by domestic demand as more firms reopened after restrictions to slow the spread of the disease were lifted.

Japan, Australia and India to Launch Supply Chain Initiative

The trade ministers of Japan, India and Australia agreed to work toward achieving supply chain resilience in the Indo-Pacific region, following reports that the three nations are looking to work together to counter China’s dominance on trade. The ministers instructed their officials to promptly hammer out details for an initiative to strengthen supply chains for launch later this year, according to a joint statement.

Australia’s Central Bank Boosts Facility, Considers Other Steps

Australia’s central bank expanded a lending facility for banks as it kept key policies unchanged, and signaled a renewed willingness to explore additional measures to boost an economy still mired in recession. “The board will maintain highly accommodative settings as long as is required,” Reserve Bank chief Philip Lowe said after keeping both the cash rate and three-year yield target unchanged at 0.25%.

Oil Rises With Global Economic Data Pointing to Demand Rebound

Oil advanced as expectations for shrinking American crude and gasoline stockpiles added to signals that a demand recovery may be on the horizon in the US and China. Brent crude for November settlement gained US$0.30 to US$45.58 per barrel.

Source: Affin Hwang Research - 2 Sept 2020