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Stocks build on post-election rally as presidential race inches to a finish

EconNov 05. 2020

By The Washington Post · Taylor Telford · BUSINESS, US-GLOBAL-MARKETS 
Global markets climbed while stock futures pointed to a third straight day of gains for Wall Street on Thursday as the U.S. election inched closer to conclusion.

Dow Jones industrial average futures pointed to an opening gain of 403 points, or 1.5 %. S&P 500 and Nasdaq 100 futures predicted 1.8% and 2.6% gains, respectively, as investors flocked back to tech after recent sell-offs. Both indexes notched their best post-election day performance on Wednesday. 

Democratic nominee Joe Biden holds a 253 to 214 electoral-vote advantage over President Trump on Thursday, as vote counting continues in Arizona, Alaska, Pennsylvania, North Carolina, Georgia and Nevada.

“It seems that Wall Street might get unofficial results fairly soon,” Ed Moya, an analyst with OANDA, said in comments emailed to The Post. “The contest is not over, and President Trump will not go down without a fight, but financial markets are confident to price in a Biden presidency along with a Republican-controlled Senate.” 

The Trump campaign said Wednesday that it would launch a legal blitz to try to halt vote-counting in Pennsylvania and Michigan, would seek a recount in Wisconsin and challenged the handling of ballots in Georgia, threatening to draw out a resolution of the White House contest. But investors on Wall Street and overseas seemed unconcerned about the potential for a more prolonged fight,

Asian markets closed up across the board Wednesday, with Hong Kong’s Hang Seng Index advancing 3.3% and Japan’s Nikkei 225 climbing 1.7%. The Shanghai Composite index gained 1.3%.

European indexes all advanced in midday trading, led by Germany’s DAX, which gained 1.5%.

“A new administration in the White House may well dial down tensions with other global superpowers on issues like trade,” Russ Mould, investment director at AJ Bell, said Thursday in comments emailed to The Post.

“This certainly seemed to be the thinking in Asia overnight as Japanese and Chinese equities staged substantial rallies.” 

As Americans anxiously waited to find out who the next president will be, a greater storm of uncertainty awaits. The U.S. shattered coronavirus records, reporting more than 104,000 new infections in a single day. Meanwhile, 18 states – including Kansas, Tennessee, Virginia, Oklahoma, Montana, Iowa, North Dakota, South Dakota, Ohio, Nebraska, Minnesota, Indiana, Wisconsin and West Virginia – reported record numbers of hospitalizations due to the virus that has killed at least 233,000 Americans since February, according to data tracked by The Post.

Investor anxieties were reflected in the plunge in the yield on the 10-year U.S. Treasury note, which was hovering near its highest point since June earlier this week. Bond yields move inversely to prices.

Gold, another safe-haven in times of turbulence, was trading up 1.3%.

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EU clears key hurdle for 1.8 trillion-euro spending package

EconNov 05. 2020A European Union flag flies in Brussels on Oct. 7, 2020. CREDIT: Bloomberg photo by Geert Vanden Wijngaert. Photo by: Geert Vanden Wijngaert — Bloomberg Location: Brussels Belgium 

By Syndication Washington Post, Bloomberg · Viktoria Dendrinou · BUSINESS, WORLD, US-GLOBAL-MARKETS, EUROPE 
European Union negotiators reached a preliminary deal with the bloc’s lawmakers on a mechanism linking recovery funds to abiding by democratic standards, moving a step closer to a broader accord on the bloc’s 1.8 trillion-euro ($2 trillion) budget and stimulus package.

“We have witnessed months and even years of rule-of-law talks dragging on without conclusion between EU member states,” said European lawmaker Petri Sarvamaa, who was negotiating on behalf of the Parliameent. “This will not be the case anymore with the new budgetary clause.”

The EU is under pressure to finalize the emergency package so that it will be operational next year, as a new set of lockdowns across the continent paints a grim picture of Europe’s economic outlook and dims prospects for a quick rebound.

While leaders agreed on the broad outlines of the unprecedented package in July, they left key details to be fleshed out later, including the contentious link between EU funds and rule of law. EU officials are due to set out details of the compromise at a press conference at noon on Thursday.

“Introducing this conditionality is a major step and a clear signal that the EU stands ready to protect its citizens’ interest,” EU Budget Commissioner Johannes Hahn said.

The deal on the rule-of-law mechanism clears the first of two key hurdles in getting an overall deal and allowing the EU’s 750 billion-euro recovery fund to be up and running in January as planned. Still, lawmakers and EU governments remain at odds over increases to the bloc’s budget, with the Parliament asking for a bigger overall package.

Potential Vetoes

While the agreement on the rule of law could give fresh impetus on the stalled talks over the spending package, it is still unclear whether it will get the support of all EU nations — especially Hungary and Poland, the two members of the bloc that are currently the subject of formal rule-of-law probes.

At stake is whether the EU can swiftly deliver hundreds of billions in much-needed funds to combat the steepest recession on record, while making sure the money isn’t misappropriated by countries where democratic checks and balances are weak.

If a deal is delayed or blocked, that could derail the bloc’s plans to issue debt on the markets to give out to EU nations as grants and loans in order to help their economic recovery.

The EU requires only a qualified majority of nations to impose the rule-of-law conditions on the funds, but the European Commission requires the unanimous approval of all member states (and a majority of EU lawmakers) to borrow from the markets. That means that in practice Hungary or Poland could veto the plan if they don’t like the rule-of-law language.

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SET, other Asian indices rally over hope of Biden win

EconNov 05. 2020

By The Nation

The Stock Exchange of Thailand (SET) Index closed at 1,264.32 on Thursday, up 41.88 points or 3.43 per cent, while total transactions tallied at Bt80.91 billion with an index high of 1,266.58 and a low of 1,232.72.

In the morning session, a Krungsri Securities analyst said he expected the day’s index to hit 1,230 points before falling on the hope that former vice president Joe Biden will win the US presidential election, as well as the rising price of oil. He added that Biden’s win would lead to positive sentiment in trade relations and a definite rollout of US economic stimulus measures.

“However, investors should beware of market volatility and mass sell-offs in stocks in line with technical indicators,” he warned.

He advised investors to monitor the US presidential election closely, at least until definite results are announced.

“US President Donald Trump is likely to approach the Supreme Court to fight the election results in two swing states, namely Wisconsin and Michigan,” the analyst added.

The top 10 stocks with the highest trade value today were CPALL, KBANK, PTT, GPSC, AOT, TASCO, IVL, PTTGC, GULF and SCGP.

As of 4.30pm, the price of oil had dropped by US$0.42 or 1.07 per cent to $38.73 per barrel, while gold rose by $22.60 or 1.19 per cent, to $1,918.80 per ounce.

Other Asian indices were also on the rise:

Japan’s Nikkei Index closed at 24,105.28, up 410.05 points or 1.73 per cent.

China’s Shanghai SE Composite Index closed at 3,320.13, up 42.69 points or 1.30 per cent, while Shenzhen SE Component Index closed at 13,894.26, up 234.76 points or 1.72 per cent.

Hong Kong’s Hang Seng Index closed at 25,695.92, up 809.78 points or 3.25 per cent.

South Korea’s KOSPI Index closed at 2,413.79, up 56.47 points or 2.40 per cent.

Taiwan’s TAIEX Index closed at 12,918.80, up 50.90 points or 0.40 per cent.

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Experts confident foreign funds will return after Bt300bn outflow from SET this year

EconNov 05. 2020

By The Nation

The Federation of Thai Capital Market Organisations (FETCO) predicts foreign funds will flow back into the Stock Exchange of Thailand (SET) next year after more than Bt300 billion fled this year.

FETCO chairman Paiboon Nalinthrangkurn expects foreign investors to continue selling Thai shares this year as they focus on technology and healthcare stocks whose value is rising in line with “new normal” trends.

However, he forecasts that foreign investors will return when Thai stocks are boosted by global economic recovery next year, adding that many analysts had adjusted their projections for SET-listed companies’ profits next year into positive territory.

“Among Asian indices, the SET has fallen farthest, and foreign investors have sold more Thai stocks than any others,” he said.

“However, we expect the index to rise next year as we have lots of stocks that will grow in line with the economic recovery.”

Somchai Amornthum, executive vice president at Krung Thai Asset Management (KTAM), said more foreign funds were likely to flow out from the SET this year due to uncertainty over the US presidential election.

He agreed foreign investment would return next year amid the global economic recovery and forecasts of 20-per-cent growth in SET-listed companies’ revenue. He also expects Thailand’s political unrest will be resolved, resulting in more positive investment sentiment.

“Regardless of the US presidential election result, many countries will launch measures and cash injections to stimulate their economies, which should help make [Thai] shares more attractive to investors,” he said.

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Electricity bills will be 2.89 satang per unit cheaper in first quarter of 2021

EconNov 05. 2020

By THE NATION

The Energy Regulatory Commission (ERC) has decided to further reduce fuel tariff for electricity generation from January to April next year by 15.32 satang from the 12.43 satang reduction put in place from September to December this year, said Khomkrit Tantrawanich, secretary-general and spokesperson of ERC.

“This will make electricity bills cheaper by 2.89 satang per unit, which means, each unit of electricity will cost Bt3.61 during that period,” he said.

Electricity bills are normally revised every four months in line with the movement of fuel prices, baht exchange rate and consumption.

“The ERC has been keeping the fuel tariff rate stable for several months to ease people’s financial burden despite the rising price of liquid natural gas [LNG] due to increased global demand,” he said.

“However, ERC’s policy of importing LNG from the spot market, which is cheaper than gas extracted from the Gulf of Thailand, has helped bring down the pool gas price and subsequently reduced the cost of generating electricity.

“The ERC has considered several risk factors, such as rising fuel prices, the economy’s failure to recover in the short term, exchange-rate fluctuation as well as the aim to maintain stable fuel tariff throughout 2021. Hence, ERC has decided to cut the fuel tariff rate by 15.32 satang from January to April 2021, which will bring electricity bills down,” he said.

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https://www.nationthailand.com/business/30397380

US cutting tariff privileges because we don’t import pork, certain products: Jurin

EconNov 05. 2020

Jurin Laksanawisit

By The Nation

The United States announced a cut in tariff privileges (Generalised System of Preferences, or GSP) for 231 Thai products effective from December 30 because Thailand is not importing pork and products that contain ractopamine – an animal feed additive used to promote leanness and growth in livestock – from the US, Deputy Prime Minister and Commerce Minister Jurin Laksanawisit revealed.

He confirmed that Thailand still has no policy to open its markets to such products due to public health and in the interest of domestic pig farmers.

The US Trade Representative (USTR) has given Thailand the opportunity to discuss and clarify the GSP issue, he said.

Jurin said he had instructed Thailand’s commercial ambassador in Washington, DC to coordinate and added that in the past the ambassador has always worked with the USTR.

“To open our market, we need to talk to a host of ministries and not just the Commerce Ministry, because the issue is related to the Department of Livestock Development under the Agriculture Ministry, the Public Health Ministry as well as the pig farmers association and other parties. The Commerce Ministry might not be able to make a decision on this matter by itself, but at this time we insist that Thailand has no policy to open up its market for those particular products,” Jurin said.

He said Thailand is working with the private sector to prepare for the impact of the US move.

“I don’t want anyone to worry too much about it. We are working with the private sector to find other markets for GSP-excluded products. Also, the private sector has said it is not concerned with the GSP cut as Thai products can compete price-wise because of good quality and reliability,” he said.

“After the GSP cut, Thai products will see a normal import tax rate of 3-4 per cent, representing a tax burden of about Bt600 million,” Jurin added.

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https://www.nationthailand.com/business/30397379?

SET rises over hope for Biden presidency, rising oil price

EconNov 05. 2020

By The Nation

The Stock Exchange of Thailand (SET) Index rose by 16.06 points, or 1.31 per cent, to 1,238.50 in the morning session on Thursday.

An analyst at Krungsri Securities expected the day’s index to hit 1,230 points before falling on hopes that former vice president Joe Biden would win the US presidential election, as well as the rising oil price. He added that if Biden wins, it would lead to positive sentiment in trade relations and the certain rollout of economic stimulus measures.

“However, investors should beware of market volatility and mass sell-offs in stocks in line with technical indicators,” he warned.

He advised investors to monitor the US presidential election closely as it is still not over until firm results.

“US President Donald Trump is likely to approach the Supreme Court to fight the election results in two swing states, namely Wisconsin and Michigan,” the analyst added.

He recommended investors buy STGT, STA, CBG, IVL, EPG, AP, Com7, Synex, Asian, Hana, SVI and TVO, whose third-quarter performance is expected to improve.

The SET Index closed at 1,222.44 on Wednesday, up 1.11 points, or 0.09 per cent. Total transactions amounted to Bt49.80 billion, with an index high of 1,231.05 points and a low of 1,214.49.

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https://www.nationthailand.com/business/30397377

Gold price rises despite global fall

EconNov 05. 2020

By The Nation

The price of gold rose by Bt100 per baht weight in morning trade on Thursday, the Gold Traders Association reported.

As of 9.30am, the buying price of a gold bar was Bt27,900 per baht weight and selling price Bt28,000, while gold ornaments cost Bt27,394.12 and Bt28,500, respectively.

At close on Wednesday, the buying price of a gold bar was Bt27,800 per baht weight and selling price Bt27,900, while gold ornaments cost Bt27,303.16 and Bt28,400, respectively.

The spot gold price moved to US$1,906 (Bt59,148) per ounce in the morning after the price dropped by $14.20 to $1,896.20 per ounce at Wednesday’s close as the market did not expect the result of the US presidential election to be announced soon because of the nail-biting fight between the Democrats and Republicans.

The Hong Kong gold price meanwhile rose by HK$130 to $17,620 (Bt70,515) per tael, the Chinese Gold and Silver Exchange Society reported.

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https://www.nationthailand.com/business/30397363

Consumers are – mostly – putting spending on hold while they wait for election results

EconNov 05. 2020

By The Washington Post · Abha Bhattarai · BUSINESS, RETAIL 
The country’s post-election state of political limbo is causing many Americans to hit the pause button on just about every type of purchase during what retailers had hoped would be an early holiday shopping season.

That uncertainty, retail analysts say, deals yet another setback to an industry that has already dealt with its share of challenges this year. Consumer spending, which typically drives about two-thirds of the economy, suffered a huge blow early in the pandemic, though it has been ticking up in recent months. But with inconclusive results casting new doubts about the country’s political and economic future, some worry that those gains could soon be wiped away.

“Covid-19 is running rampant, there was no vaccine by Election Day and unemployment is still at grotesque recessionary levels,” said Mark Cohen, director of retail studies for Columbia Business School. “Roll that up in a ball, add in the vagaries of the election, and it all speaks to a pretty grim holiday retail season. This is not going to be a banner year for sweaters and handbags.”

Americans spent $2 billion online on Election Day – a 27% increase from a year earlier, but still about 11% less than in the preceding two days, according to Adobe Analytics, which analyzed more than 1 trillion visits to U.S. retail sites. The group said it expects online sales to dip by as much as $300 million on Wednesday while the country awaited election results.

“Consumers generally do not like uncertainty in any form and tend to pull back on spending during unpredictable times,” said Vivek Pandya, senior digital insights manager at Adobe. But, he said, he did not expect a “material impact on overall holiday sales.”

While some Americans may have stocked up on non-perishables and toilet paper in recent days, because of supply chain concerns or fears of election-related unrest, analysts say they don’t anticipate panic buying to pick up in coming weeks. Overall holiday spending is expected to be tepid this year, with Deloitte predicting sales growth between 1% and 1.5%.

“Consumer spending is on hold now while the election is being contested,” said Greg Portell, a partner in the global consumer practice at consulting firm Kearney. “There’s so much uncertainty and angst on both sides of the debate that consumers aren’t going to be prioritizing shopping in any way.”

Matthew Shay, chief executive of the National Retail Federation, on Wednesday urged Americans to “be patient and peaceful” while votes are being counted. But, he said, he doesn’t think the uncertainty of the election will translate to a long-term dip in spending.

“A temporary moment of uncertainty is not going to be consequential in terms of consumer behavior,” he said in an interview. “Consumers have demonstrated that they are resilient and have the ability to not be distracted by external factors that out of their control.”

And while some consumers and retailers reported “stress shopping” for items like winter sweaters, face creams and candles this week, analysts say many more are putting off major purchases until there is more certainty.

“If the last election is any indication, people may be anxious for a few days but then things get back to normal pretty quickly,” said Sucharita Kodali, an analyst for Forrester. “Half of the country will be thrilled with the results no matter what happens.”

On election night, Nikole Watson, 29, was perched on her couch, scrolling through her phone while voting results puttered in. When ads for warm, cozy clothing popped up on Facebook and Instagram, she couldn’t resist. She ended up buying two sweaters and two coats, in hopes that they’d give her the kind of “instant gratification” she wasn’t getting from the news. But, she says, she’s put off bigger-ticket items like furniture until she has a sense of which way the country – and the economy – are headed.

“There is so much anxiety out there, so I don’t want to make a huge purchase right now,” the 29-year-old executive assistant said. “Instead I’m gearing toward small purchases that make me feel better.”

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https://www.nationthailand.com/business/30397349

Dow jumps 367 points as Wall Street looks past election uncertainty

EconNov 05. 2020

By  The Washington Post · Taylor Telford, Hannah Denham · BUSINESS, US-GLOBAL-MARKETS 

U.S. markets soared Wednesday, lifted by tech shares, as investors waited for final results in the highly charged presidential race.

Earlier in the day, President Donald Trump falsely asserted election fraud, pledged to mount a legal challenge to official state results and made a premature claim of victory. His Democratic rival, Joe Biden, maintains that he is still “on track to win this election” and called for patience, citing several key states where votes were still being counted. As of 5 p.m. Wednesday, Biden led Trump by 39 electoral votes, 253 to 214, according to The Washington Post’s tracker.

“We have seen a market rally for the past two sessions ahead of the election with the hope of ending electoral uncertainty,” Anthony Denier, chief executive of the mobile-app based brokerage Webull, said in comments emailed to The Post. “A contested election is the biggest risk facing the markets amid this election cycle.” 

After whipsawing overnight and surging nearly 800 points at midday, the Dow Jones industrial average ended the session at 27,847.66, up 367.63 points, or nearly 1.3%. The S&P 500 index added 74.28 points, or 2.2%, to settle at 3,443.44. The tech-heavy Nasdaq 100 swelled 430.21 points, or nearly 3.9%, to end at 11,590.78.

Michael Farr, president of Farr, Miller & Washington said the post-election rally mirrors what happened in 2016, when investors reckoned with an unexpected result and rallied by morning.

“Pundits were telling us to expect a blue wave, but we didn’t get it. It doesn’t look like the Senate is going to have a significant majority one way or the other, and we don’t know who the president is going to be,” Farr said. “But with all that in mind, Wall Street was able to recalculate.” 

A record-breaking 101 million Americans cast ballots before Election Day as many voters sought to avoid crowded polling places because of the coronavirus pandemic. Voter turnout is on pace to be the highest in more than a century, according to Edison Research, with more than 157 million ballots cast, representing a 65.7% turnout rate among eligible voters. The flood of early and mail-in voting has reshaped how and when most ballots are counted, creating uncertainty around when results will be known.

“Chaos is the last thing people want, particularly when coronavirus is causing so much disruption to the world,” Russ Mould, investment director at AJ Bell, said in emailed comments to The Post. “We’re now facing the prospect of volatile markets for days or potentially weeks until the election is sorted out.” 

The yield on the 10-year U.S. Treasury note, which had edged near its highest level since June, tumbled 13% as investors flocked to safe havens. Bond yields move inversely to prices.

Jesse Cohen, a senior analyst at Investing.com, said risk appetites are waning in response to the possibility of a prolonged legal battle to settle the election outcome.

“If this were to go to the Supreme Court, then the results would take even longer,” Cohen said Wednesday in comments emailed to The Post. “That’s probably the worst-case scenario out of all the possible ones at the moment.” 

Election uncertainty is merely compounding the overwhelming unknowns as the economic recovery trudges onward and the pandemic threatens to cause another wave of business and travel restrictions. The coronavirus has killed at least 233,000 Americans and sickened at least 9.45 million.

On Wednesday, ADP’s private payroll report showed that American firms added 365,000 jobs last month. Well below analyst forecasts, the figure reflects the uphill battle facing the recovery. Investors are looking toward weekly jobless claims data Thursday for a more recent snapshot.

“When the election is finally decided, we have a heck of a lot of challenges to tackle on the way to full recovery,” Mike Loewengart, managing director of investment strategy at E-Trade, said in an email to The Post.

In oil markets, which are more focused on the pandemic and market fundamentals than the election, prices climbed higher after OPEC and its allies considered further production cuts. Previous cuts this year have put OPEC on track for its lowest revenue in 18 years.

Brent crude, the international oil benchmark, settled 3.4% higher, at $41.23 per barrel. West Texas Intermediate crude, the U.S. oil benchmark, climbed 4%, to $39.15.