First, US President Trump announced the end of negotiations on a new Corona aid package, and one day later came the U-turn. Airlines should now be financially supported. The news provides relief on the trading floor.
Investors on the US stock exchanges quickly digested the shock of stopping in the negotiation poker for fresh economic aid. US President Donald Trump nourished hopes on the stock exchanges that at least the ailing aviation industry could be helped quickly. The leading index Dow Jones Industrial gained 1.91 percent to 28,303.46 points. For the broad market S&P 500 went up 1.74 percent to 3419.45 points. The technology-heavy one Nasdaq 100 ended the day with plus 1.88 percent to 11,503.19 points.
One day after his discharge from the hospital where he had been treated for his coronavirus infection, Trump surprisingly postponed negotiations with the opposition Democrats about new economic aid until after the presidential election on November 3rd. However, shortly afterwards he insisted $ 25 billion airline aid packagedesigned to secure the jobs of tens of thousands of employees. The shares of Delta Air, American Airlines, United Airlines and JetBlue Airways rose between three and 6.8 percent.
The stop of the talks about the big stimulus package is unlikely to trigger a significant sell-off, said stockbrokers. "Most market participants did not expect a deal before the election anyway," said Milan Cutkovic, market analyst at the brokerage firm Axi Corp. If, however, no stimulus package is announced shortly after the election, investors could become increasingly nervous that the economic recovery is losing momentum.
Because many stock exchange traders assumed that the impetus for the economy was only postponed, but not canceled. "Even if it shouldn't be possible to reach an agreement before the elections, Biden's growing lead in the polls makes it more likely that one can eventually agree on substantial incentives," said the strategists at UBS. In the event of a clear victory for the democratic challenger Joe Biden, the markets expected even more far-reaching fiscal aid, said Deutsche Bank analysts. The minutes of the Fed's monetary policy meeting in September could provide further impetus. Investors will pay particular attention to details about the central bank's new approach to inflation.
Financial stocks were particularly popular among investors. In line with rising bond yields, the sector index rose by almost two percent. Stocks of Levi Strauss, the 1.9 percent increased. The US jeans group was surprisingly in the black again. New store openings are also planned. Analysts had feared that many shops would have to close due to the Corona crisis. Shares of Eli Lilly gained 3.3 percentafter the pharmaceutical company applied for emergency approval for a Covid-19 drug. Antibody therapy should be used in patients with an increased risk and mild to moderate corona diseases.
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