5/28/20 Market Notes
Equities rose for the third consecutive session on optimism that economic reopening is evidence that the worst has passed. The S&P 500 added 44 points (1.5%), closing above its 200 day moving average. The Dow closed up 2.2 % at 25,548, and Nasdaq gained 0.8%. Oil edged lower, and gold, US Treasuries, and the Dollar were mostly unchanged. All the S&P sectors posted gains with Financials, Industrials and Real Estate leading the field for the second consecutive session while Information Technology and Communication Services gains were more subdued. Comments by Dr. Anthony Fauci that a vaccine could be deployed as early as November and that a second wave of the virus is not inevitable helped buoy sentiment while Secretary of State, Mike Pompeo’s declaration that Hong Kong is no longer autonomous from China kept gains in check. Most European and Asian Markets posted gains overnight, riding the euphoria of government stimulus liquidity. Hong Kong was an exception, with the Hang Seng flirting with March lows after China’s National People’s Congress rubber stamped legislation that broadly curbs freedoms in Hong Kong. The move essentially brings an end to autonomy in this important financial hub while escalating tensions with China across the globe. More broadly, Hong Kong's special status that allows visa-free travel and tariff-free imports depends on Hong Kong being certified by the State Department as 'sufficiently autonomous'. Revocation of the special status would likely end Hong Kong's role as an international financial center while ramping up tensions. Investors will get a second look at Q1 GDP estimates today, which are expected to be unchanged from the prior estimate of a 4.4% contraction. Initial jobless claims for last week will also be released, with the consensus expecting 2.1 million new claims. A preliminary read on Durable Good Orders rounds out today’s calendar. Sincerely,
Disclosures: This market commentary is written by the 1879 Advisors® and represents the views of 1879 Advisors®. This commentary is not investment advice and should not be used as a basis to make investment decisions. Please consult with your registered investment advisor before making any investment decisions.