Daily summary: US stocks rally led by Big-Tech

European stocks finished today's session in mixed moods with  DAX 30 rising 0.7%, CAC40 gained 0.6% while FTSE 100 lost 0.3% as several countries decided to implement new restrictions due to surging number of new COVID-19 infections. Spain declared a state of emergency in Madrid and nearby cities, and more restrictions on public life and businesses were imposed. Italian government will most likely announce new restrictions shortly as number of infections reached levels last seen in March. Meantime, UK Prime Minister Boris Johnson announced a three-tier system of further restrictions to be imposed on parts of England.  The “medium” level will apply to the majority of England, and encompassed the current restrictions which include banning groups of more than six people meeting up and forcing pubs and restaurants to close at 10 p.m. The “high” level will apply to the parts of the country which are already in local lockdown, where residents are not allowed to mix with other households or meet up unless outside. The “very high” level will apply to areas where the transmission of the coronavirus is rising rapidly. In these areas, pubs and bars, gyms, betting shops and casinos will be closed. On the monetary policy front, the Bank of England urged the UK’s commercial banks to prepare for possible negative interest rates, suggesting policymakers are seriously considering turning rates below zero for the first time in history.

 

US indices are trading higher extending recent gains, with the Dow Jones up more than 1%, the S&P 500 rising more than 1.65% and the Nasdaq more than 2.4%. Tech giants stocks rose after the Organization for Economic Cooperation and Development said that talks on a new system for taxing multinationals had failed to reach an agreement. This means that big tech companies will be able to use their current tax minimization strategies for the foreseeable future, despite concerns on the part of regulators on both sides of the Atlantic. Meanwhile investors continue to monitor developments on a new coronavirus aid bill and focus on the earnings season with major US banks being the first to report on Tuesday. Investors are betting that the results will show corporate performance has turned a corner, helping lift stocks higher. This is likely to be a big week for the tech sector, with Apple  expected to launch its 5G iPhone 12 on Tuesday and Amazon's Prime Day occurring on Oct. 13-14. Meanwhile Trump administration called on Congress to pass a smaller coronavirus relief package using leftover funds from an expired small-business loan program, after the near $1.9 trillion proposal hit resistance from both Democrats and Republicans over the weekend.

 

Oil prices took a hit today as Libya announced on the weekend that it would be ramping up supplies in the coming weeks after a truce in the civil war. Also rising number of new coronavirus cases across the globe and prospects of further lockdowns raised concerns over fuel demand recovery. Meanwhile Norwegian offshore workers ended a strike that had threatened to take a quarter of the country’s output offline, while producers in the Gulf of Mexico also tentatively restarted production as Hurricane Delta moved inland. U.S. crude futures are trading over 3.0% lower  at $39.33 a barrel, while Brent futures are down 2.9% at $41.60 a barrel. Elsewhere, gold is trading around $1,925 an ounce, retreating from a three-week high of $1,932, while silver is trading slightly higher around  $25.1 an ounce, having hit a three-week high of $25.6 earlier in the session.