Stocks Climb, Led by Big Tech; Crude Oil Declines

US stocks advanced, led by gains in the biggest technology companies, as investors weighed the chances Democratic lawmakers and the White House will reach a deal for a fiscal-stimulus package. Oil tumbled on concern the market may be oversupplied. The S&P 500 rose by 0.53% to 3,380.80 while Dow Jones was up 35.20 points (0.13%) to 27,816.90.

US Jobless Claims Drop While Remaining Above Pre-virus Level

Fewer Americans than expected sought unemployment benefits last week, as the slow labor-market recovery grinds on while businesses contend with a pickup in coronavirus cases. Initial jobless claims in regular state programs decreased by 36,000 to 837,000 in the week ended Sept. 26, Labor Department figures showed.

US Personal Income Falls After Federal Jobless Benefit Expires

Americans’ incomes fell in August by the most in three months after the government’s supplemental unemployment benefits expired, threatening to temper consumer spending that increased during the month. The 2.7% decrease in personal income followed an upwardly revised 0.5% gain a month earlier, according to Commerce Department data.

ECB’s De Cos Backs Fed-style Strategy of Inflation Overshoot

European Central Bank policy maker Pablo Hernandez de Cos added his support to arguments for a Federal Reserve-style strategy that allows officials to temporarily overshoot their inflation goal. Echoing comments a day earlier by President Lagarde, the Bank of Spain governor said it’s worth examining a more “symmetrical” inflation target. The ECB should make it clear “that the degree of acceptance for inflation deviations above the target will be the same as when such deviations are below.”

Germany Helps Euro-area Factories to Best Growth in Two Years

Manufacturing in the euro zone expanded at the fastest pace in more than two years thanks to a strong upturn in Germany, with a sharp pickup in trade helping to pull the economy out of the coronavirus recession. While Asia’s factories displayed fitful progress in September, the euro area saw output, new orders and confidence in business prospects all improve, according to an IHS Markit survey. At the same time, companies in the region continued to cut jobs -- the latest sign that they remain skeptical that the current pace of recovery can be maintained.

Philippines Holds Key Rate as It Boosts Debt Financing

The Philippine central bank kept its key interest rate unchanged for a second straight meeting and approved an US$11bn cash advance to the government to support pandemic relief measures. The central bank left its benchmark rate at 2.25%. “A continued pause will allow prior measures by the Bangko Sentral ng Pilipinas to further work their way through the economy,” Governor Benjamin Diokno said in a statement.

Asia’s Factories Show Mixed Recovery as Japan, India Gain

Asia’s factories showed more fitful progress in September, with India seeing a jump in sentiment and Japan making a slow and steady recovery, manufacturing gauges show. Japan’s purchasing managers index rose to 47.7, its highest since February, from 47.2, while Vietnam improved to the best in more than a year according to IHS Markit figures.

Oil Extends Second Weekly Loss Amid Conflicting Stimulus Signals

Oil fell for a second day as conflicting signals over the prospect of US fiscal relief added to concerns over a recovery in consumption. Brent crude for November settlement fell US$1.37 to US$40.93 per barrel.

Source: Affin Hwang Research - 2 Oct 2020