2023-08-01 20:58:00
In the US stock market on the 1st, the S&P 500 stock index and the Nasdaq Composite Index fell. The momentum that had boosted the market by regarding 30% from its lows in October last year has somewhat stalled.
S&P 500 Stock Index 4576.73-12.23-0.27% Dow Jones Industrial Average 35630.6871.150.20% Nasdaq Composite Index 14283.91-62.11-0.43%
U.S. job openings for June, released today, suggested that demand for workers is softening somewhat. That wasn’t enough to attract investors, and corporate earnings were mixed. The U.S. employment report is due to be released on the 4th.
U.S. job openings drop in June, lowest since 2021; layoffs curbed
“The market seems to have taken a break from the long-running rally,” said Fawad Razaqzada, market analyst at City Index. He said there may be some downward movement as investors appear to be “wait-and-see” ahead of earnings reports from the likes of Apple and Amazon.com, as well as jobs data. .
“The market stumbled at the start of August, with investors worried that upcoming corporate earnings may not yet reflect the current trough of the cycle,” said Jose Torres of Interactive Brokers. It is in, ”analyzed. “It’s not a good season for stocks,” he added.
Savita Subramanian, a strategist at Bank of America (BofA), said there was no reason to worry regarding stock positions just because everyone was rushing. BofA’s sell-side index (a measure of the stock allocation recommended by sell-side strategists) is still in the neutral territory, saying, “Higher allocations to equities and lower allocations to bonds will be consistent with the bond preference/equity avoidance model constructed in 2022. It’s the opposite move to the position of .
government bonds
U.S. Treasuries fell for all maturities (yields rose). Yields on 30-year bonds hit their highest level since November last year. The U.S. Treasury Department plans to issue more bonds with longer maturities to finance the growing budget deficit.
U.S. Quarterly Auction to Increase to $102 Billion Issue Size
The 30-year bond yield temporarily rose by 10 basis points (bp, 1bp = 0.01%) to 4.11%. It surpassed the year-to-date high of 4.08% set on the 10th of last month. Yields on 10-year bonds rose more than 9 basis points at one point, while yields on 2-year bonds rose more than 3 basis points.
JGB latest price vs. previous business day (bp) rate of change US 30-year bond yield 4.10% 8.82.20% US 10-year bond yield 4.03% 7.01.77% US 2-year bond yield 4.90% 2.50.51% US Eastern Time 16:00 50 minutes
On July 31, the U.S. Treasury Department upwardly revised its forecast for federal borrowing needs for the July-September period to $1 trillion (regarding ¥143 trillion). It greatly exceeded the previous forecast of $ 733 billion shown in May, and also exceeded the forecast of some market players.
U.S. Treasury raises September quarter borrowing needs forecast to $1 trillion
Subhadra Rajappa, head of U.S. rates strategy at Societe Generale, said the market’s attention had shifted to the quarterly auctions, which will be announced on Wednesday.
foreign exchange
The yen fell once morest the dollar in the foreign exchange market. At one point, it fell 0.9% to 143.55 yen, the lowest price in more than three weeks.
Bloomberg Dollar Index 1224.166.080.50%USD/JPY¥143.35¥1.060.74%EUR/USD$1.0983-$0.0014-0.13% 16:50 US ET
Meera Chandan, a currency strategist at JPMorgan Chase & Co., said the dollar might fall to a range of 150-152 yen to the dollar by the end of the year on the back of interest rate differentials between Japan and the United States.
In an interview, he said, “The reason behind this is that although the BOJ is changing its policy, it will be done very slowly, and the exit from negative interest rates will not be realized until early next year. I have expectations,” he said.
Yen might drop to 152 yen to $1 by the end of the year – JPMorgan
Bloomberg’s dollar spot index hit a three-week high.
“Even in a soft-landing scenario that dominates the FX market, the dollar might perform well,” said Valentin Marinov, head of G10 FX strategy at Crédit Agricole CIB. “In particular, stronger U.S. data and the prospect that the U.S. rate hike cycle is nearing its peak should make dollar assets more attractive,” he said.
Australian dollar fell once morest all 10 other major currencies. The fact that the Bank of Australia’s policy interest rate, the official cash rate, has remained unchanged for two consecutive meetings has had an impact.
Bank of Australia keeps policy rate unchanged at 4.1%, including need to resume tightening (3)
The Australian dollar fell 1.6% once morest the US dollar to its lowest since July 6.
crude
The New York crude oil market slowed down amid thin summer trading. A risk-off mood prevailed across the financial markets and technical factors prevented further gains.
A stronger dollar weighed on commodities, with crude futures closing near $81 a barrel. Although the market has turned positive since the start of the year in the summer rally, traders are bracing for the possibility of a technical correction. The Relative Strength Index (RSI) entered overbought territory in the last few days, suggesting a potential drop in prices. Volatility remained at its lowest level since January 2020 as trading was lulled by a summer of light trading.
Oil prices surged in July. Demand exceeded supply due to the production cuts of OPEC Plus, which consists of the Organization of the Petroleum Exporting Countries (OPEC) and non-member oil-producing countries. Oil giants BP and Chevron are betting that consumption will continue to grow. Banks such as Goldman Sachs Group agreed with this view, pointing out that the supply-demand balance had fallen into a supply shortage.
Upper row: WTI futures, Lower row: Relative Strength Index
Source: Bloomberg
So far, stocks have traded near their highs for the year and oil prices have been supported by risk-on sentiment across financial markets. The global demand outlook improved on signs of more stimulus to the Chinese economy and speculation that the tightening of monetary policy in the United States was nearing an end.
Still, there are multiple reasons to be cautious regarding expecting a step higher in the near term. The largest oil exchange traded fund (ETF) recently posted a record daily outflow. It seems that investors took profits in light of the price increase.
WTI futures for September delivery on the New York Mercantile Exchange (NYMEX) closed at $81.37 a barrel, down 43 cents (0.5%) from the previous day. London ICE North Sea Brent October delivery fell 52 cents to $84.91.
Money
The New York gold market fell. Gold rose last month to its biggest since March.
Gold prices have generally ranged in recent weeks, with traders waiting for clarity on the outlook for U.S. monetary policy.
Gold spot price (left scale) and Bloomberg Dollar Index (right scale)
Source: Bloomberg
The US manufacturing business index and the number of job openings released on the day were both weaker than expected, but the dollar was still higher than yesterday’s close. Commerzbank analyst Thu Lan Nguyen said in a report before the release of the data that signs of a contraction in U.S. manufacturing activity “might quickly dampen positive economic sentiment. There will be a tailwind,” he said. He just said he “would need a slew of lower-than-expected economic data to trigger a sustained move.”
December futures on the New York Mercantile Exchange (COMEX) closed at $1,978.80 an ounce, down $30.40 (1.5%) from the previous day. As of 2:06 pm New York time, the spot price was down 1.1% to $1,943.37.
Original title:Stocks ‘Bend, Don’t Break’ After Almost 30% Rally: Markets Wrap(excerpt)
Stocks Bend, Don’t Break After 30% Rally From Lows: Markets Wrap(excerpt)
Treasury 30-Year Yield Jumps to Highest Level Since November (Excerpt)
Dollar Gauge at Three-Week High; Aussie Declines: Inside G-10（抜粋）
Oil’s Summer Rally Takes a Pause on Risk-Off Tone, Dollar’s Gain(excerpt)
Gold Declines as Bearish Stock Markets Push the Dollar Higher（抜粋）
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