Optimism rose in U.S. equity as President Donald Trump’s health condition improves and hopes for fresh economic stimulus put a brake on selling that whipped up Friday.
“The dramatic turn of events may be a catalyst for a stimulus agreement – or it may not; we wait for bills to be put to Congress and votes to be taken,” said Julian Emanuel, chief equity strategist for BTIG, wrote in a note. “With key economic data extending its run of disappointments versus expectations and high-profile corporate layoffs, additional aid would seem imperative.”
Futures on the S&P 500 gained 0.7% at 2:31 p.m. in Tokyo, while the underlying gauge rose 1.5% last week. Nasdaq 100 futures climbed 0.9% and the Dow Jones Industrial Average added 0.7%.
As traders shunned haven assets, the yen fell against all Group-of-10 currencies. It dropped 0.3% against the dollar to 105.56 yen.
“Optimism over Trump’s health is growing rapidly to prompt purchases in stocks, while the yen is sold,” said Masakazu Satou, a currency adviser at retail FX brokerage Gaitame Online in Tokyo. “Risk sentiment could improve further as Trump’s condition appears to be better than originally believed. But now we need to see whether Trump will actually be discharged from the hospital later on Monday.”
Since the end of August, volatility has gripped the markets. At one point Friday, the CBOE Volatility Index jumped by the most in the month. It ended the week at 27.63.
Kumiko Ishikawa, a currency analyst at Sony Financial Holdings told “Markets are in a waiting mode now with some optimism and expectations that Trump may show some compromising stance after recovering from Covid-19 to push talks on stimulus forward. “Still, much remains uncertain.”