Wednesday July 5, 2023: $191.33 -($1.13) -(0.59%)
Jul 5, 2023 1:08:52 GMT -8
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Post by Dave on Jul 5, 2023 1:08:52 GMT -8
Good morning. This morning’s pre-market is red at -0.49% at this moment.
Stocks Decline as China Data Saps Risk Sentiment: Markets Wrap
Wednesday, July 5
Factory Orders (May)
IBD/TIPP Economic Optimism Index (Jul)
FOMC Meeting Minutes
Factory Orders (May)
IBD/TIPP Economic Optimism Index (Jul)
FOMC Meeting Minutes
The latest evidence of slowing economic growth around the globe is sapping demand for equities after a stellar rally in the first half, driven mostly by mega-cap tech stocks. Major central banks including the Federal Reserve and European Central Bank are still in tightening mode, clamping the brakes on economic growth.
“It’s too early to say how deep the recession that is to come will be, but clearly a slowdown is coming,” Fabiana Fedeli, chief investment officer for equities and multi assets at M&G Plc, said on Bloomberg TV. “It’s too early to throw in the towel on risk assets whether in equities or credit. But at the same time you have to stay pretty high on the quality pole.”
With more interest-rate hikes anticipated from the Fed and the ECB in July, an aggregate gauge of borrowing costs calculated by Bloomberg Economics now shows a peak of 6.25% this quarter, up from 6% foreseen three months ago. Later Wednesday, traders will monitoring the minutes of the Fed’s last policy meeting, which left Wall Street perplexed as officials paused their rate-hike cycle after 10 consecutive moves, but forecast two additional increases this year.
A gauge of dollar strength edged higher, while the yield on policy-sensitive two-year Treasuries drifted about three basis points lower to 4.91% as US bond trading resumed. European bonds gained, with Germany’s 10-year yield dipping three basis points to 2.42%.
Initial losses in Chinese equities deepened and the offshore yuan reversed an advance after the Caixin China services purchasing managers’ index was weaker than expected. The yuan’s drop was also notable because it came despite the central bank earlier maintaining its support for the currency in its daily fix.
“This brings focus back on slowing growth momentum and the recent step-up in geopolitical angst,” Charu Chanana, market strategist at Saxo Capital Markets, said of the China services data.
The fading optimism over the outlook for China has also driven investors to lower their expectations for gains in Asian equities this year. A survey of 17 strategists and fund managers by Bloomberg News indicates MSCI Inc.’s Asia-Pacific Index may only rise about 5% by year end from Tuesday’s closing level.
“It’s too early to say how deep the recession that is to come will be, but clearly a slowdown is coming,” Fabiana Fedeli, chief investment officer for equities and multi assets at M&G Plc, said on Bloomberg TV. “It’s too early to throw in the towel on risk assets whether in equities or credit. But at the same time you have to stay pretty high on the quality pole.”
With more interest-rate hikes anticipated from the Fed and the ECB in July, an aggregate gauge of borrowing costs calculated by Bloomberg Economics now shows a peak of 6.25% this quarter, up from 6% foreseen three months ago. Later Wednesday, traders will monitoring the minutes of the Fed’s last policy meeting, which left Wall Street perplexed as officials paused their rate-hike cycle after 10 consecutive moves, but forecast two additional increases this year.
A gauge of dollar strength edged higher, while the yield on policy-sensitive two-year Treasuries drifted about three basis points lower to 4.91% as US bond trading resumed. European bonds gained, with Germany’s 10-year yield dipping three basis points to 2.42%.
Initial losses in Chinese equities deepened and the offshore yuan reversed an advance after the Caixin China services purchasing managers’ index was weaker than expected. The yuan’s drop was also notable because it came despite the central bank earlier maintaining its support for the currency in its daily fix.
“This brings focus back on slowing growth momentum and the recent step-up in geopolitical angst,” Charu Chanana, market strategist at Saxo Capital Markets, said of the China services data.
The fading optimism over the outlook for China has also driven investors to lower their expectations for gains in Asian equities this year. A survey of 17 strategists and fund managers by Bloomberg News indicates MSCI Inc.’s Asia-Pacific Index may only rise about 5% by year end from Tuesday’s closing level.