- Major US stock indices all traded higher Monday morning, in stark contrast to China where markets saw their worst day in years.
- Investors may be turning to US stocks because they have few other options, John Stoltzfus told Markets Insider.
- Treasuries are overbought and investors are eager to move into dollar-denominated assets, he said.
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Major US indices opened higher Monday, as the coronavirus alarm that sent China’s benchmark stock index to its worst opening in nearly 13 years stopped short of US shores. The relative optimism in US stocks may be a signal that investors don’t have many other places to turn. With emerging markets more vulnerable and Treasuries “overbought” to the point of making their safe-haven status unappealing, US stocks may appeal to investors looking for a dollar-based asset amidst the selloff, John Stoltzfus, analyst at Oppenheimer, told Markets Insider. US bonds are “overbought after the run up in price since January 17, when coronavirus moved into centre stage on the worry scale,” Stoltzfus said, adding that stocks look more appealing on a relative basis after post-January 17 selling action. The Dow Jones Industrial Average rose as much as 362 points Monday morning, with the S&P 500 and Nasdaq notching gains as well. That’s after stocks on the Chinese CSI 300 index fell as much as 9.1% earlier in the day.
It was the first day of trading in China after an extended Lunar New Year holiday. Behind the selloff is fear of coronavirus, the fast-spreading illness that originated in Wuhan, China, and has now infected over 17,000, killing 360 and spreading to over two dozen countries.Nike,Disney, and pharmaceutical company Merck & Co. led gains in the Dow on Monday. The morning’s sanguinity comes after weeks where coronavirus roiled US markets, too: US stocks across major indices tumbled Friday, with the Dow posting its worse performance since August.