‘Relief rally’ pushes equity markets higher; bonds flat

‘Relief rally’ pushes equity markets higher; bonds flat
The dollar index fell on Sunday, erasing some of last week’s gains, down 0.4 percent on the day at 94.157. (Reuters/File)
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Updated 29 September 2020

‘Relief rally’ pushes equity markets higher; bonds flat

‘Relief rally’ pushes equity markets higher; bonds flat
  • Dollar falls from two-month highs; US Treasury yields hover near 0.66 percent

NEW YORK: Global equity markets surged and the dollar fell from two-month highs Monday as investors moved into the shares of beaten-down sectors such as banks and travel stocks on the heels of a sharp stock market sell-off the week before.

Asian shares gained, with Chinese shares boosted by data over the weekend showing China’s industrial firms grew for the fourth consecutive month in August.

“We’re seeing a bit of a relief rally,” said Jonathan Bell, chief investment officer at Stanhope Capital. “Things got oversold perhaps a little bit in the short term.”

“We saw quite a lot of exuberance in July and August, with prices, particularly of tech stocks, rising and that then has come off a little bit recently,” he said.

MSCI’s gauge of stocks across the globe gained 1.79 percent following broad gains in Asia and Europe.

The STOXX 600’s banking stock index was up 4.4 percent, after hitting a fresh all-time low on Friday. In midmorning trading on Wall Street, the Dow Jones Industrial Average rose 488.98 points, or 1.8 percent, to 27,662.94; the S&P 500 gained 54.73 points, or 1.66 percent, to 3,353.19; and the Nasdaq Composite added 162.86 points, or 1.49 percent, to 11,076.42.

Hotels, banks, and airline stocks all gained more than the broad market, with shares of Delta Air Lines Inc. up nearly 4 percent and Bank of America Corp. up nearly 2.5 percent.

The dollar index fell, erasing some of last week’s gains, down 0.4 percent on the day at 94.157.

Investors remain broadly cautious in light of rising new COVID-19 infections in Europe, which pose the risk of further restrictions on activity.

Benchmark 10-year notes last fell 1/32 in price to yield 0.661 percent, from 0.659 percent late on Friday.

“You’re seeing a nice bounce for stocks, but it’s more of an oversold bounce, and the bond market is still apprehensive about totally buying in on this equity move,” given the uncertainty over additional fiscal stimulus in the United States and the Nov. 3 presidential election, said Ryan Detrick, chief market strategist at LPL Financial.

US crude recently rose 0.62 percent to $40.50 per barrel and Brent was at $42.14, up 0.52 percent on the day.

Saudi private sector rebounds with growth at 10-month high

Updated 04 December 2020

Saudi private sector rebounds with growth at 10-month high

Saudi private sector rebounds with growth at 10-month high
  • Steep rise in sales and growing business confidence spark jump in purchasing, hiring activity

RIYADH: Business activity in Saudi Arabia has risen to its highest level since January this year, showing the Kingdom’s economy is beginning to overcome the worst effects of the coronavirus pandemic.

According to IHS Markit’s Purchasing Managers’ Index (PMI) Survey, the acceleration of output growth in the Saudi economy in November was driven by a steep rise in sales and strengthening business confidence.

The survey found that input purchasing rose, while employment growth also returned for the first time since January. Input cost inflation also quickened, leading to a stronger increase in average output charges.

The index has now registered above the 50.0 no-change mark for three months in a row, highlighting a sustained recovery after the economic downturn due to the pandemic.

The Saudi PMI rose to 54.7 in November from 51 the previous month — the strongest improvement since January. The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared with the previous month, and below 50 an overall decrease.

Both domestic and foreign sales rose last month, marking only the second upturn in new export orders since February.

Business confidence for the year ahead also improved notably during the month. In particular, firms were encouraged by the Saudi government’s easing of lockdown curbs and news of a breakthrough in the development of a vaccine.

Accelerated rises in output and new orders led Saudi firms to sharply expand purchasing activity during November. In addition, hiring activity turned positive and a number of companies linked increased employment to rising demand.

Commenting on the latest survey, David Owen, an economist at IHS Markit, said: “A third successive rise in the Saudi Arabia PMI pointed to an economy getting back on its feet in November. Supported by output and new business growth reaching 10-month highs, the data suggests a strong end to the year for the non-oil private sector. Notably, employment started to rise, while business confidence strengthened in the wake of encouraging vaccine news and sharper demand growth.”

Saudi economist and financial analyst Talat Zaki Hafiz told Arab News: “The improvement is due to many factors, such as the reopening of the market with the ease in lockdown and, finally, the lifting of the curfew. The return to normality has had a significant impact on private sector performance.”

Hafiz added: “Things will get much better by the next year. We have also noticed an improvement in oil prices recently and this will improve things significantly.”