2023-08-08 20:48:00
The US stock market fell back on the 8th. Investor sentiment worsened following a series of events from China, Italy and the United States heightened concerns regarding the financial system and the economy. However, towards the end of the season, there was some bargain-buying, and the margin of decline was reduced.
S&P 500 Index 4499.38-19.06-0.42% Dow Jones Industrial Average 35314.49-158.64-0.45% Nasdaq Composite Index 13884.32-110.08-0.79%
Eli Lilly led the gains in healthcare stocks, supporting the downside of the S&P 500 index. Eli Lilly has revised its earnings forecast upward, citing higher-than-expected sales of its diabetes drug Manjaro, which is in high demand as an anti-obesity drug. New research also raises hopes that it may reduce the risk of heart disease. Apple, which had been in the longest falling phase since December last year with a five-day consecutive drop until the day before, ended with a slight increase.
Bank shares were sold. Credit rating agency Moody’s Investors Service downgraded 10 small and medium-sized U.S. banks and announced that it would review the ratings of six major banks for downgrade. In Italy, the Meloni government has approved an unexpected tax on banks’ “excess profits” this year. Bank stocks in the country also tumbled. The disappointing trade data from China weighed on the economy, and the price of copper, a barometer of economic growth, plummeted.
Philadelphia Fed President John Harker said the Fed might end its hikes in the absence of economic surprises, but said rates would need to remain at current high levels for the time being. “Maybe sometime next year we will start cutting rates,” he said. Richmond Fed President Barkin said it was too early to discuss whether the Federal Open Market Committee (FOMC) should raise interest rates in September.
Deutsche Bank’s chief strategist Bankim Chadder said he hasn’t changed his year-end forecast for the S&P 500 at around 4,500 this year, but if the Fed manages to squelch inflation without triggering a recession, it might reach 5,000. We think it is possible for the stock to rise above the market.
David Spica, president and chief investment officer of Guidestone Capital Management, said he expects the Fed’s repressive policies to lead to a weakening economy and a correction in the stock market going forward. He said market valuations were “still unreasonable”.
Some traders noted that the S&P 500 has turned back following gaining regarding 20% this year. Market sentiment recently reached its highest level this year, which historically is a short-term bearish signal that suggests a gradual decline.
“We continue to believe the stock market is likely to fall regarding 5% to 10% from its recent highs into the second half,” said Dan Wontrowski, head of technical analysis at Janney Montgomery Scott & Co. “Selling pressure will often drive the chart into oversold territory, so be on the lookout for a strong pullback in the near term,” he said.
government bonds
U.S. Treasuries rise. Longer-term bonds outperformed, pushing 10-year yields down to around 4%. The bond market is set to hold a series of auctions this week. Auctions for $42 billion worth of three-year bonds on Monday showed yields below market expectations, suggesting strong demand.
JGB latest price change rate (bp) US 30-year yield 4.21%-6.0-1.41% US 10-year yield 4.02%-6.4-1.58% US 2-year yield 4.76%-0.4-0.09% East US time 16:40
Yield spreads between 2- and 10-year bonds initially flattened, but were partially unwound following a strong 3-year bond auction. The bid-to-cover ratio for the three-year bond auction was 2.90, higher than the average of 2.69 for the past six auctions.
money order
In the New York foreign exchange market, the Bloomberg dollar spot index rose to a high level for the first time in regarding a month. Risk aversion has strengthened due to renewed concerns regarding the Chinese economy. The yen continued to fall once morest the dollar on weak wages data.
Bloomberg Dollar Index 1231.055.230.43% USD/JPY¥143.41¥0.910.64% EUR/USD$1.0955-$0.0047-0.43% 4:40 p.m. ET
Dollar outperforms major 10 currencies. In addition to China’s weak trade statistics, the Chinese authorities have hinted that they will tolerate further depreciation of the yuan.
“Chinese authorities may not want the yuan to weaken further, but a reversal of the downtrend is unlikely until U.S. Treasury yields peak,” said Kit Jacks, chief global FX strategist at Societe Generale in a report. . “The trend of stronger dollar and weaker yuan will also increase pressure on the yen, Australian dollar and New Zealand dollar,” he said.
The U.S. trade deficit narrowed to $65.5 billion in June following imports fell to the lowest level since 2021.
The yen dropped 0.7% to 143.49 yen once morest the dollar. Japan’s real wage data fell more than expected, adding to uncertainty over whether the Bank of Japan can achieve sustained price stability.
“The yen is selling as wage data confirms the need for the Bank of Japan to continue its accommodative monetary policy,” said Mingze Wu, a currency trader at StoneX Group. He said widening interest rate differentials are conscious and will weigh on the yen.
crude
Crude oil futures in New York rebounded. Ukrainian President Volodymyr Zelensky’s remarks were taken into consideration, and the price temporarily rose above $83 per barrel. Mr Zelensky told reporters in Kyiv that he would retaliate if Russia continued to block Ukrainian ports.
Mr. Zelensky’s warning sparked awareness of possible supply disruptions, and buying dominated the crude futures market. Saudi Arabia also reaffirmed its commitment to voluntary supply cuts next month.
Meanwhile, the outlook for softer demand weighed on the market. The US Energy Information Administration (EIA) cut its forecast for US consumption. Reports from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) to be released this week are expected to provide new information on the health of the market.
West Texas Intermediate (WTI) futures for September delivery on the New York Mercantile Exchange (NYMEX) closed at $82.92 a barrel, up 98 cents (1.2%) from the previous day. London ICE North Sea Brent October delivery rose 83 cents (1%) to $86.17.
Money
The New York gold market continues to fall. Selling dominated as the dollar strengthened amid concerns over China’s economic recovery. The dollar and gold typically move in opposite directions.
Earlier in the day, Fed Governor Bowman said he believed further interest rate hikes may be needed to restore full price stability. Rising interest rates generally make non-interest-bearing gold relatively less attractive.
But if the U.S. CPI released on Wednesday shows moderate price growth, which policymakers want, the pressure to continue raising rates might be removed.
The December futures contract on the New York Mercantile Exchange (COMEX) closed at $1,959.90 an ounce, down $10.10 (0.5%) from the previous day. The spot price was down 0.6% to $1,925.29 as of 2:25 p.m. New York time.
Original title:Stocks Close Well Off Lows as Dip Buyers Emerge: Markets Wrap
Treasuries Bid Holds, Flattening Fades After Strong 3-Year Sale
Dollar Jumps Most Since March After Weak China Data: Inside G-10
Oil Rises as Russia-Ukraine Escalation Threatens Supply Turmoil
Gold Edges Down as Dollar Gains on Downbeat China Trade Data
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