TheDow Joneszoomed above 27, 000 on Monday as global stocks rose in anticipation of an ultra-dovish European Central Bank meeting on Thursday.
Bullish sentiment spread along with easing trade war fears after China lifted tariffs on some US goods in an apparent attempt to unfreeze negotiations.
The Apple product showcase has theiPhone maker’s stock booming, further propping up the Dow despite a sharp drop in oil prices.
Dow Rallies Despite Slumping Oil Prices
Heading into the late afternoon, theDow Jones Industrial Averagehad rallied 138. 98 points or 0. (% to) , 048. 41.
Chinalifted tariffson many US goods today, providing a crucial risk-positive boost to the Dow. Xi’s administration did opt to maintain agricultural tariffs to keep up political pressure on Trump’s base.
There was also good news for the stock market in the UK, as a Scottish Court ruled the move to shut down Parliament wasunlawful. This may further reduce the likelihood of a no-dealBrexit, one of the major tail risks looming for the global economy. The 0. 98 % bounce in a beleagueredFTSE 100helped carry a positive mood into the US session .
Oil’s steep decline followed a report confirming that John Bolton was fired from his role as National Security Advisor because he pushed back against Trump’s plans to ease sanctions on Iran. This sent oil prices plummeting at the prospect of markets becoming awash with Iranian crude, even asEIA inventoriesfell 4.3 million barrels more than expected today.
On the other hand, the removal ofrenowned war-hawkBolton is a reliable indicator Trump is starting his expected charm offensive to lift the Dow Jones ahead of the2020 election.
ECB Stimulus May Fail to Reignite European Growth
The big economic risk event this week is undoubtedly theECB rate meeting. Buoyant stock markets are mostly anticipating a healthy stimulus package for the flagging eurozone economy.
While a brighter mood in Europe would undoubtedly help US indices like the Dow and S&P 500, questions are being raised as to whether Mario Draghi’s stimulus package will work.
Boris Schlossberg, Managing Director at BK Asset Management, believes that there is even a risk ofdamageto the economy, as he writes in hisdaily report (***********:
“In the EZ, unlike in US, savers traditionally allocate the vast majority of their funds to fixed income instruments rather than equities.With rates already negative across the region, saving becomes even more difficult, requiring more and more capital, thus dampening demand. More QE, therefore, creates a vicious rather a virtuous cycle with respect to growth and not only becomes ineffective but rather counterproductive. “
Dow Jones 30: Apple Buoyant After Showcase
Amongst theDow 30, Chevron and Exxon Mobil were conspicuous laggards amid the drop in energy prices and theWorsening longer-term outlook for crude.
Powering the index higher, Apple and Boeing carried the load with gains of 2. 64% and 3. 43%. AAPL stock is responding positively to yesterday’s product showcase, bucking the typicalpost-launch trend. Investors are clearly enthused by plans for the new iPhone and the launch ofApple TV.
Apple’s iPhone 11 Triggered an Insanely Weird Twitter Meltdownhttps://t.co/kC5JGog7vh
– CCN Markets (@CCNMarkets) (September) , 2019
Boeing’s rally was more surprising given how bad the news has been for one of the Dow’s mostheavily weighted stocks. The US’s largest aerospace exporter posted itsworst delivery numbers in eight yearson Wednesday. Despite this poor data,CEO Dennis Muilenberg’s optimismthat the 737 Max would be flying in Q4 of 2019 appeared to deflect negativity from BA stock.
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Last modified (UTC): September 11, 2019 7 : 10 PM
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