Are We at the Peak of a V-Shaped Economic Recovery?

Highlights:

• Wall Street rebounded, and Nasdaq posted a record lifted by big tech stocks;
• The Shanghai Composite index in China posted a rise for the third consecutive day advancing by 0.25%. Meanwhile, the Hang Seng added 1.3%;
• Nikkei settled flat yielding 0,03% after a slight rebound;
• Seoul Stock Exchange advanced by 0.55%, but limited its gains and settled with a rise of 0.38%;
• Nifty settled with a loss caused by a decline in the auto segment, metal, and IT sectors. Among the 30 shares on Sensex, 22 stocks traded in the red at the closing time.

Wall Street started Tuesday with a decrease, with the Dow dropping by 0.1% and the S&P 500 declining by 0.04%. Meanwhile, the Nasdaq opened with a gain of 0.02% and settled with a record gain.

Shares on the NYSE rebounded, with the Dow Jones increasing by 0.20% or 68.61 points, to 33,945.58. The selective S&P 500 advanced 0.51% or 21.65 points, to 4,246.44. As for the Nasdaq, it advanced by 0.79% or 111.79 points, to 14,253.27. 

As analysts expected, Jerome Powell kept talking about the transitory nature of inflation. However, the central bank chairman stated that inflation has considerably increased in recent months. 

Powell’s remarks followed the Federal Reserve meeting last week when officials warned they could raise interest rates and begin tapering. The central bank statement led to a selloff on Wall Street. Still, stocks recovered on Monday, the S&P surging by 1.4%, recouping much of last week’s losses. 

Tom Mantione, managing director at UBS Private Wealth Management, stated uncertainty over how the Fed may react to sustained inflation. And that puzzles the market even though the central bank has not changed its accommodative policy. 

David Riley, a strategist at BlueBay Asset Management, stated that the peak of V-shaped economic recovery is approaching. It is a challenging period for corporate earnings. 

 

Big tech companies surging on the Wall Street

Almost all corporate sectors closed with gains, led by non-essential goods, technology, and communications.

Among the Dow 30 listed on the Dow Jones, the companies with a notable advance were Nike with a rise of 1.85%, Home Depot advanced by 1.66%. Apple followed them with a raise of 1.27%, and Microsoft gained 1.10%. 

As for the losses, Merck posted the steepest drop, yielding 0.73%. Meanwhile, Boeing lost 0.61%, and Salesforce plummeted by 0.56%.

Kospi Rose but with Limited Gains

The Kospi, the main index of the Seoul stock exchange, settled with a rise of 0.38% or 12.31 points. The surge followed Jerome Powell’s conservative stance towards increasing interest rates. 

The KOSPI started strong at 3,265.73, adding 0.06%. In the early section of the market, it rapidly expanded and climbed above 3,277. However, it soon narrowed its rise and turned weak. The index succeeded in rebounding and then rose again. In the afternoon, it peaked at 3,281.88. After that, it returned some of the uptrends in the mid-to-late 3,270 level and eventually closed at 3,276.19.

While foreigners and institutions showed a simultaneous sell-off, the increase was limited. The number of confirmed Covid-19 cases increased, and concerns about the virus spreading grew.

The Kosdaq technology stock index added 0.48% or 4.90 points to 1,016.46 units.

The technological Samsung Electronics hiked by 0.12%. Meanwhile, SK Hynix, the second largest national chip maker, gained 1.64%.

Navar, the country’s main internet provider, soared by 8.31%, and its rival Kakao reached a record price surging by 6.6%.

Pharmaceutical Samsung Biologics rose by 1.3%.

Regarding Hyundai Motor, South Korea’s largest carmaker, it expanded by 0.62%. Meanwhile, chemical company LG Chem slumped by 0.83%.

Korean finance minister Hong Nam-ki said the planned supplementary budget, the second of this year, is expected to be worth more than 30 trillion won ($26.42 billion).

The Nikkei Closed at a Loss After a Slight Rebound

The Nikkei, the main index of the Tokyo Stock Exchange, settled almost flat, decreasing by 0/03 after it rebounded slightly in the morning. 

Moreover, the Nikkei decreased by 9.20 points to 28,874.89 integers.

The Topix, including the highest capitalization companies, dropped by 10.39 points or 0.53% to stand at 1,949.14.

The Tokyo stock market got off to a strong start, buoyed by gains on Wall Street and fears of an early withdrawal of US stimulus.

As for the securities with the highest capitalization, Softbank decreased by 0.18%. Meanwhile, Toyota Motor, the Japanese leader of the automotive sector, yielded 1.78%.

It’s also worthy to note the fall of Esai, a pharmaceutical company, by 5.03%. 

Nintendo, the video game developer, lost 1.70%, and Sony technology corporation plunged by 2.02%.

Lasertec, the manufacturer of components for semiconductors, advanced by 2.52%. Meanwhile, Fast Retailing, owner of the chain of clothing stores Uniqlo, expanded by 2.05%.

In the first section, 1,179 values ​​dropped as opposed to the 858 that advanced. Meanwhile, 145 stocks ended unchanged.

The trading volume amounted to 2.28 trillion yen.

Chinese Stocks Settled Higher on Commodity and Healthcare Profits

Chinese shares increased on Wednesday, with the healthcare and commodity stocks leading the gains. The country approved its first CAR-T cell therapy. At the same time, investors got appeased by the Fed’s promise that the central bank will not rush to hike rates. 

The Shanghai Composite index increased by 0.25% or 8.81 points to 3,566.22. The SSE posted a rise for the third consecutive day. 

The sub-index for the non-ferrous metal sector advanced by 1.68%. Meanwhile, the coal sector climbed by 3.48%. 

The smaller Shenzhen index rose by 0.69%, and ChiNext composite index increased by 1.126%.

Automakers represented the most significant percentage gainers in the main Shanghai Composite index. Liaoning SG Automotive Group Co Ltd and Anhui Jianghuai Automobile Group Corp Ltd soared by the daily limit of 10% each. 

As for China’s blue-chip CSI300, it added 0.49%, or 25.24 points to 5,147.39.

The financial sector added 0.13%, and the consumer staples sector dropped by 1.24%. At the same time, the real estate index increased by 0.13%. 

The Hang Seng, the main index of the Hong Kong Stock Exchange, advanced by 1.3%. 

Jerome Powell’s comment lifted investor’s risk appetite. 

On Wednesday, China’s state planner announced having sent teams with the market regulator to various areas. They aim to delve into commodities prices, supplies, and study mid-and downstream companies’ situations.

India’s stock market sank on economic data

India’s benchmark indices ended their three-day winning streak. 

The S&P BSE Sensex index declined by 0.54% or 282.6 points to 52,306. Meanwhile, the Nifty50 index dropped by 0.54% or 86 points to 15,687. 

Moody’s CY21 growth forecast dampened the sentiment on the Indian stock exchange. Moody’s Investors Service projected the country’s economic growth to 9.6% for 2021, while its earlier estimate stood at 13.9%. The corporation reported that due to the lockdown and covid-19-induced restrictions, there would be a decline in economic activity in the first quarter of this year.

BSE Consumer Durables and the BSE Auto index were the only sectors that managed to settle on favorable ground. The BSE Consumer durables index increased by 0.83%, while the BSE Auto index added almost 0.5%, supported by an increase of Mauruti Suzuki and Hero Motors. 

As for the main losers of the day, VIP Industries, Symphony, and Dixon Technologies declined the most, losing more than 1% each. By sectors, the Nifty Metal posted the most significant loss by 1%, and IT dropped by 0.87%.