2023-07-24 15:59:59
The slowdown in the growth of US commercial activity may relieve the “Fed” on the eve of its meeting
Business activity in the United States slowed to a 5-month low in July, dragged down by slowing growth in the services sector, closely watched survey data showed on Monday.
But lower input prices and slower hiring indicate that the Federal Reserve may be making progress on important fronts in its quest to curb inflation, according to Archyde.com.
And Standard & Poor’s Global said that the composite purchasing managers’ index in the United States, which tracks the manufacturing and services sectors, fell to a reading of 52 in July from 53.2 in June, knowing that readings above 50 indicated expansion.
The July reading showed a sixth consecutive month of growth, but it was constrained by softening conditions in the services sector.
The lackluster survey data on Monday supported evidence that the US economy was still growing as the third quarter began, but at a slower rate than in the April-June period.
“The overall rate of output growth, measured across manufacturing and services, is consistent with GDP growth at a quarterly annualized rate of about 1.5 percent at the start of the third quarter,” said Chris Williamson, chief business economist at S&P Global Market Intelligence. “This is less than the 2 percent pace the survey indicated in the second quarter.”
Following the release of the data, US Treasury yields for 10 years fell 2.60 basis points per day, at 3.813 percent. While US stocks retained their gains.
A slowdown might be seen positively at the Fed, which is keen to see activity cool to bring down inflation.
On Wednesday, policymakers are expected to raise interest rates by a quarter of a percentage point, to between 5.25 percent and 5.5 percent, in what many investors and economists see as the last potential increase of the current cycle.
global financial markets
While all eyes are on the meetings of the Federal Reserve and the European Central Bank, on Thursday, and the Bank of Japan, on Friday, caution prevailed in the opening trading of the week in global financial markets, in anticipation of the outcome of these meetings.
Bob Savage, head of market strategy at BNY Mellon, told Archyde.com: “The past week made the markets expect a soft decline in the US markets in which the Fed ends the cycle of raising interest rates … and then witnesses a steady decline in the consumer price index without a recession.”
He added, “The European Central Bank is also expected to be nearing the end, with technical recession easing in Germany and growth consolidating elsewhere. The Bank of Japan seems to be talking about change but not doing much about it.
In stock markets, Spanish stocks topped the losers among the European stock exchanges on Monday after the end of the general elections in the country without a clear winner, which indicates a political stalemate and raises concern among investors.
The Spanish stock index fell 1.1 percent, its lowest level in about a week, after the results of the elections that took place at the weekend did not give either the right or the left a comfortable path to form a government.
In Asia, the Japanese Nikkei index closed higher for the first time in 3 sessions, with automakers’ stocks rising, taking advantage of the yen’s decline, at a time when investors reduced their bets that the country’s central bank would change its monetary policy this week. The Japanese currency fell to about 142 yen per dollar on Friday.
Chip-related stocks rallied after falling for two sessions, tracking their US peers. Steel stocks also increased after Tokyo Steel’s stock rose by the maximum daily limit, thanks to the company’s strong earnings announcement.
The Nikkei index closed up 1.23 percent, at 32,700.94 points. Among the 225 stocks listed on the index, 198 rose and 25 fell, while two remained unchanged. The broader Topix index rose 0.84 percent to 2,281.18 points.
The sub-index for transportation equipment manufacturers rose 1.65 percent, making it one of the three best-performing sectors on the Tokyo Stock Exchange. Mitsubishi Motors was the best performer on the Nikkei index, jumping 5 percent after announcing positive financial data during the session.
Meanwhile, there was little change in gold in spot transactions, and it remained at 1960.01 dollars an ounce by 05:36 GMT, while US gold futures fell 0.2 percent to 1961.80 dollars.
oil
On the other hand, oil prices rose during the trading session on Monday, and exceeded 81 dollars a barrel, due to the lack of supply and hopes for Chinese incentives to revive the second largest economy in the world.
By 14:53 GMT, Brent crude futures rose 0.88 percent to $81.56 a barrel. West Texas Intermediate crude futures rose 1.22 percent to $78.02 a barrel.
The two raw materials rose 1.5 percent and 2.2 percent, respectively, during the past week, in the fourth consecutive week of gains, with expectations of a decrease in supply in the wake of the “OPEC Plus” group cuts.
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