Stock investors betting on the rise on bad news.

 

Complete: 2020/12/03 06:40 GMT FXTM Senior Market Strategist Hussein Sayed 

On Wednesday, the S&P 500 index rose 0.2 percent to a new all-time high as cyclical selling of the economy continued through the first week of December. Despite some gloomy news, investor sentiment remains positive.  Corona 19 in the U.S. topped 100,000 for the first time, with daily confirmed cases soaring to a record 196,695 and deaths rising. Regarding economic indicators, the number of ADP private employment rose 307,000 in November, below the 475,000 forecast, the lowest since July. According to a recent Fed survey, a surge in the number of Corona 19 confirmed cases has slowed economic activity in some U.S. regions. 

But the news didn't dampen investor sentiment.  Market keyword 'vaccine' supports the stock market's rise. Huizawa Bio&Tech has already been approved in Britain for emergency use of the Corona 19 vaccine and is expected to be approved in the United States on December 10, with Moderna and AstraZeneca underway. What market participants hope is that the fast release of vaccines will significantly reduce the number of confirmed cases, increasing demand and speeding up the economy. 

The resumption of negotiations on the Corona stimulus package in the U.S. is another reason for optimism, and if it is passed in the next few weeks, it could lead to another rally.  However, it is better not to expect that the stimulus package will be passed soon because the Democrats and Republicans still differ over the size of the stimulus. Even if we don't reach an agreement, it's not a big problem overall, so I still think the low-cost buying strategy is valid. 

Oil prices have fallen slightly as OPEC and non-members are scheduled to resume talks today after failing to agree on a cut in production earlier this week. Given the current level of oil prices, the market seems confident that 7.7 million barrels will be cut by three months. This is our basic scenario, but we cannot rule out the possibility of a surprise announcement. Attention should be paid to the outcome of the meeting, as caution of division among OPEC's coalition could lead to a sharp drop in oil prices.