4:05 pm: US equities tumble hard
US stocks closed down hard on the first day of 2021 trading as investors fretted rising COVID-19 cases and eyed the US Senate runoff elections in Georgia.
On the day, the Dow Jones Industrial Average fell 382 points, or 1.25%, to 30,223. The S&P 500 dropped 1.48% to 3,700 and the tech-heavy Nasdaq decreased 1.47% to 12,698.
12:25 pm: Slide continues for DJIA, others
The Dow continued its downward spiral after what appeared to be a promising start, dropping 679 points, 2.2%, to 29,927.2. The Nasdaq gave up more than 300 points, 2.4%, to hit 12,584, and the S&P 500 slipped 81 points, 2.3%, to 3,674.
Concerns are mounting again around the coronavirus. Across the pond, Scotland is scheduled to enter a lockdown at midnight, and the UK may follow suit. According to data from Johns Hopkins University, more than 20 million infections have been confirmed in the US in total, including cases of a new strain.
10.30am: Proactive North America headlines:
Empower Clinics (CSE:CBDT) (OTCMARKETS:EPWCF) (FRA:8EC) closes deal to acquire Canadian Clinics and reveals significant discussions with nationwide rollout partners
NexTech AR Solutions Corp (CSE:TAR) (OTCQB:NEXCF) (FRA:N29) increases its Bitcoin holdings to US$4M and up-lists its stock to NEO
Milestone Scientific Inc (NYSEAMERICAN:MLSS) sees its CompuFlo disposables enter the prestigious University of Texas Medical Branch at Galveston
BioLargo Inc (OTCQB:BLGO) receives further validation for its AOS water disinfection system with commercial-scale projects set to begin this year
Benchmark Metals Inc (CVE:BNCH) (OTCQX:BNCHF) touts 2020 drilling progress ahead of mineral resource estimate, preliminary economic study
9:48 am: Wall Street pulls a 180
Despite a short positive burst at the opening bell that saw the Dow and S&P 500 hit record highs, the main Wall Street indices swiftly reversed course on Monday morning.
In the first minutes of trading, the Dow Jones Industrial Average was down 0.24% at 30,532 while the S&P 500 dropped 0.18% to 3,749 and the Nasdaq fell 0.11% to 12,878.
The quick reversal may have surprised some traders as the session was expected to be a positive one to start 2021.
Political developments in the US, namely the Georgia Senate runoff elections on Tuesday and formal Congressional approval of Joe Biden’s electoral college victory on Wednesday, may have given markets pause for thought and some may decide to hold fire until the last vestiges of uncertainty from the US election are finally laid to rest ahead of the presidential inauguration on January 20.
8:00 am: Wall Street set to start 2021 on a higher note
The main indices on Wall Street look set to begin the first trading session of 2021 on a positive note as investors take heart from news of vaccine rollouts and new fiscal stimulus.
Spread betting quotes point to the Dow Jones Industrial Average opening 144 points higher at 30,750 or thereabouts.
The S&P 500 is expected to open its 2021 account 17 points higher at 3,773 while the Nasdaq Composite is on course to rise 54 points to 12,942.
“After contemplating on what might be next for the markets during the holiday period, stock market investors are apparently in the same bullish mood as they were before despite growing concerns over valuations and the economy. The disconnect between economic reality and the markets have thus broadened, all thanks to cheap central bank and government money flooding the financial markets,” according to Fawad Razaqzada of ThinkMarkets.
“Along with stocks, gold and silver have also started the new year with a bang as the dollar has extended its falls. The ongoing risk-rally means investors are continuing to swap their dollars for more risk sensitive currencies such as commodity dollars and emerging market currencies. As a result, the dollar index has fallen to levels not seen early 2018. This, in turn, has helped to push prices of buck-denominated precious metals even higher,” the analyst added.
While markets seem to be determined to ignore the worrying rise in the number of coronavirus cases, attention probably will be paid to the US manufacturing purchasing managers’ index (PMI) due out in a couple of hours.
Economists have pencilled in a reading of 56.3 for December.
Meanwhile, traders will also be eyeing the final day of campaigning in Georgia before voters in the state head to the polls on Tuesday to elect their two Senators in a race that has the potential to decide the fate of incoming president Joe Biden’s legislative agenda.
“A Democrat victory in both [Senate races] would give the party control of the White House, House of Representatives and the Senate. That could open the way to further fiscal stimulus and sweep aside Republican opposition, spearheaded by Senate majority leader Mitch McConnell, to an increase in the latest round of welfare payments to US$2,000 a head from US$600, for those earning less than US$75,000 a year”, said AJ Bell’s Russ Mould.
He added that such an outcome, and associated increases in US government spending, will likely add pressure to the dollar and increases chances of inflation, which in turn could help lift equities.
Five things to watch for on Monday:
- The first trading day of 2021 will bring little in the corporate diary, although the macro calendar will see the US manufacturing PMI reading for December
- Other macro data includes US construction spending for November, while a number of members of the Federal Reserve are also scheduled to make speeches today
- Shares in Google parent Alphabet Inc (NASDAQ:GOOGL) may also be eyed following reports that hundreds of workers at the search engine giant have formed a union, potentially setting the stage for a clash with management
- Also in focus will be Brookfield Property Partners LP (NASDAQ:BPY) after Canadian firm Brookfield Asset Management Inc offered to buy the segment of the partnership it does not already own for US$5.9 billion, or US$16.5 per share, a premium of around 14% on the December 31 closing price
- Bitcoin will also be holding focus after hitting fresh highs over the weekend, however so far on Monday the cryptocurrency has seen a sharp drop in value, down 7.6% at US$31,124 this morning