Stock futures are trading higher as traders are ready to back riskier assets once again. Investors’ are considering yesterday’s pullback as an opportunity to buy stocks at a lower price.
The US stock market snapped its six-day rally yesterday. The Dow Jones Industrial Average slipped 0.03% or nearly 9.93 points to 31,375.83. This was the index’s first daily loss in seven sessions. The S&P 500 also declined by 0.11% but still closed near its all-time high. The Nasdaq Composite continued its uptrend and closed higher by 0.14%.
Over in Asia, we had some important economic numbers out; the Chinese factory gate prices advanced in annual terms last month. This happened for the first time in nearly 12 months. The rate of increase was also the fastest since May 2019, which means that the world’s second-biggest economy is gathering more growth momentum. We also saw the PPI index jumping over 0.3%, compared to a year earlier, but this number missed the forecast of 0.4%. Overall, data confirmed that the Chinese economy is expected to experience a growth of 8.4% in 2021, which is three times more in comparison to the last year.
Coronavirus and Stimulus Bill
Investors are keeping a close eye on the coronavirus situation as the current mutation of the virus is the single biggest threat to global growth. The fact is that coronavirus is mutating fast, and we are not getting new vaccines on time. In addition to this, there are also concerns that achieving the desired immunity level may also take some time. Hence, it is essential that the US lawmakers not delay another support package for the US economy. It is encouraging to see the details of the new relief bill revealed by Democrats yesterday, which contains $1,400 direct stimulus cheques. Of course, we are still quite far in achieving the actual target as all lawmakers need to be on the same page for the relief bill to become a reality.
In terms of stock news, yesterday we saw earnings from Twitter; the company failed to beat Wall Street expectations—the user growth wasn’t as impressive as Wall Street was expecting. In addition to this, Twitter also sees its expenses increase this year as it increased its labour force by nearly 20%.
The Twitter stock posted modest gains in after-market hours yesterday. The revenue growth was much stronger than Wall Street’ss expectation. Earnings per share came in at 38 cents; revenue was 1.29 billion and monetisable daily active users 192 million. The most positive factor about Twitter was it expects its revenue growth to outsize its expenses in 2021—an important message that any investor likes to see.
In terms of economic numbers, we are expecting the Consumer Price Index data to print a more optimistic reading. The forecast is for 0.3%, while the previous reading was at 0.4%. In addition to this, we also have the Fed chair, Jerome Powell, scheduled to speak later today. His view about the economy will be gauged by investors and traders very closely.
In terms of commodities, gold prices are still moving higher, and they are well away from their recent low. Investors are optimistic about the stimulus package, which is helping the gold price to move higher. In addition to this, the dollar index’s weakness is providing further support for the gold rally. Overall, we still need the gold price to break above the 1,900 price before we can seriously say that gold prices are out of danger and the only way for them is to move higher.