Why yesterday U.S. Indices recovered from its low ignoring surging Covid-19 cases around the world?

Key highlights that on U.S. Indices recovery Yesterday

  • Fed announced to purchase corporate bonds to support the economical activities in the country.
  • This step will further boost liquidity in the system and will spur growth.
  • All the three U.S. indices recovered sharply after this news.
  • Dow recovered more than 1000 points from its low and other indices sees similar sharp recovery.
  • Re-surging cases of covid -19 raises fear of Second Wave of infection around the world, a key risk for global equities.
  • China closes some parts of Beijing after 75 people found positive for corona virus in last few days.
  • Asian markets are trading strong on the back of U.S. markets recoveries.
  • SGX is in positive note this morning.

U.S. Indices

Why U.S. Indices recovered on Fed decision to buy corporate bonds?

  • Fed decision to buy corporate bond led to sharp recovery of U.S. indices. This will further fuel the liquidity into the system and will spur the growth. This made investors buy the U.S. stocks from their lows yesterday and fulled a stellar rally into the market.
  • Indices have ignored a negative news of closure of some parts in Beijing after 75 people tested positive from corona virus infection. A sudden spike in covid 19 cases can be seen all around the world threatening second wave of infection. This is a real concern for the stocks markets in near future and all the indices are showing fatigue to resume uptrend.
  • Some U.S. states like Texas, California, Florida and other states have seen sudden spike of corona virus cases. This can be seen by sudden spike in hospitalization rates.
  • Thursday already we have seen worst performance of equities indices all around the world. All major indices had fallen sharply lower on the back of this reason. In case things get worst than further correction can’t be ruled out.

US Markets

  • Dow Jones Industrial Average increased by 157.62 points, or 0.62%, close at 25,763.16.
  • The S&P 500 gained by 25.28 points, or 0.83%, ends at 3,066.59.
  • Nasdaq Composite Index surged by 137.21 points, or 1.43%, close at 9,726.02.

Asian Markets This Morning

IndicesCurrent ValuePrev. Close% Change
Nikkei 22522,191.0621530.951.82%
Straits Times2,680.562613.882.55%
Hang Seng  24,318.1523776.952.28%
Taiwan Weighted11,478.6911306.26 1.53%
Shanghai Composite2,889.942890.03-0.09%
SGX Nifty9,977.509796.501.85%
Time of data collection: 7:16 A.M

Nifty Outlook

  • SGX Nifty is suggesting a positive start with gain more than 1.85% at present time (7.05 a.m.). Indian Markets will start at around 10000 level. This optimism has come from recent rally in U.S. indices from its low on the back of Fed decision to buy corporate bonds in U.S.
  • Today nifty outlook is positive for the day. Traders should follow Buy on Dip strategy and Buy Nifty future on Dip. Have a look on You tube video to understand technical charts:

For long term portfolio, Read this article.

Leave a Reply