US Market starts 2020 with new records on China stimulus, trade hopes

The US stock market finished at new record highs on the first trading day of 2020, Thursday, 02 January 2020, as investors risk sentiments buoyed by easing Sino-U.S. trade tensions and monetary policy easing by China's central bank aimed at stimulating the country's economy. At closing bell, the Dow Jones Industrial Average rose 330.36 points, or 1.16%, to 28,868.80, while the S&P 500 gained 27.07 points, or 0.84%, to trade at 3,257.85. The Nasdaq Composite index rallied 119.59 points, 1.33%, to close at 9,092.20. Financial markets in the U.S. closed Wednesday for New Year's Day. For the CY2019, The S&P 500 gained 28.9% and the Nasdaq was up 35.2%, while the Dow Jones Industrial Average gained 22.3%.

Investors risk sentiments got a boot amid initial Sino-U.S. trade deal progress. The U.S. President Donald Trump said on Tuesday that Phase 1 of trade deal with China would be signed on Jan. 15 at the White House and that he would later travel to Beijing to begin negotiations on the next phase. That came following reports indicating Chinese Vice Premier Liu He, Beijing's top trade negotiator, could sign the agreement.

 

News of monetary policy easing by China also aided sentiment after the country's central bank on Wednesday cut the amount of cash that banks must hold as reserves to boost the economy. The People's Bank of China announced on Wednesday that it was going to lower the reserve requirement ratio for banks by 50 basis points with effect from Jan. 6, unleashing about 800 billion yuan ($115 billion) in funds. The move is expected to boost the country's slowing economy ahead of the Lunar New Year, which falls on Jan. 25.

The tech sector was the biggest gainer among the 11 major S&P sectors, with Apple Inc and Microsoft Corp providing the biggest boost. Communication services and industrial stocks also notched solid gains, with Facebook, Boeing, and General Electric rose in between 2% to 7%. Traditionally defensive groups such as utilities, real estate and consumer staples fell between 1% and 1.6%. U.S. casino operators rose after December gross gaming revenue in Macau fell less than expected.

Anixter International climbed after the supplier of communication and security products agreed to a higher buyout offer from private equity firm Clayton, Dubilier and Rice.

CURRENCY NEWS: The dollar fell to 108.55 Japanese yen from 108.72 yen on Wednesday. The euro weakened to $1.1166 from $1.1262.

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