The US stock market declined yesterday but closed the day without a single trend. The fall was observed in almost all sectors of the economy. Only some industries stayed in the green zone (semiconductor and software companies). Oil & gas, healthcare, industrials, and consumer cyclical sectors showed the biggest declines. At the end of the day, the S&P 500 index decreased by 0.46%, the Dow Jones index lost 0.92%, while the Nasdaq index added 0.13%. The leaders of the decline among S&P 500 components were General Motors stock (-8.95%) and Lumen Technologies stock (-8.86%). Shares of Robinhood Markets jumped by 50.4% as interest from the famous Kathy Wood fund, and the popularity of the service set investors and traders up to buy. Because of the growing spread of the COVID-19 Delta strain, traders and investors are also actively buying Moderna and Pfizer stocks.
Meanwhile, the dollar index jumped yesterday due to the Fed’s hint of an early cutting of the QE program. A lot will depend on Friday’s non-farm payrolls data. ADP private sector employment change was 330,000 in July. It’s below expectations but still an improvement for the labor market.
European stock markets increased by the end of the day, confirming that there is no unified correlation between the US and European indices for now. The British FTSE 100 increased by 0.3%, the German DAX increased by 0.9%, and the French CAC 40 added 0.3%. The Eurozone Services PMI Index was revised lower yesterday. In general, the dynamics of economic growth in Europe are maintained, but there is a slight slowdown. In Germany, 10-year bond yields fell to -0.51%, the lowest level since early February. Today the Bank of England will report on its interest rate and further plans on monetary policy. According to economists, the Bank of England will not change the main parameters of its monetary policy despite some appeals to tighten it.
According to the US Energy Information Administration (EIA), crude oil inventories unexpectedly increased by 3.6 million barrels last week. The situation in the oil market is becoming uncertain now. On the one hand, OPEC+ countries are increasing oil production now. On the other hand, the spread of Delta strain is putting pressure on oil price growth. The growing tension between Iran and world leader countries over the drone attacks on oil tankers has also added to the uncertainty. Iran denies any involvement. But global banks still expect oil prices to rise to $85 per barrel by the fourth quarter since the oil demand is strongly ahead of the growth of supply.
Asian stock indices were mostly higher yesterday. The broadest index of Asia-Pacific stocks outside of Japan, the MSCI, increased by 0.22%, and Japan’s Nikkei added 0.32%. Australia’s index added 0.18%, while China’s blue-chip CSI 300 decreased by 0.28%, and Hong Kong’s index fell by 0.45%. In China, mass testing of the population continues after the spread of the Delta strain made many businesses close and also forced Beijing to close routes to 20 provinces in China. New Zealand’s unemployment rate fell to its lowest level in a year (4%), the number of unemployed decreased by 12.4%, the largest quarterly decline since the first survey in 1986.
Main market quotes:
- S&P 500 (F) 4,402.66 -20.49 (-0.46%)
- Dow Jones 34,792.67 -323.73 (-0.92%)
- DAX 15,692.13 +137.05 (+0.88%)
- FTSE 100 7,123.86 +18.14 (+0.26%)
- USD Index 92.28 +0.19 (+0.21%)
Important events for today:
- UK Construction PMI (m/m) at 11:30 (GMT+3);
- UK BoE Interest Rate Decision (m/m) at 14:00 (GMT+3);
- UK BoE Monetary Policy Report at 14:00 (GMT+3);
- US Initial Jobless Claims at 15:30 (GMT+3);
- US Natural Gas Storage (w/w) at 17:30 (GMT+3).
