In today’s daily market update, we delve into the recent movements on Wall Street and global markets. Investors navigated through a mixed bag of economic data, setting the stage for the upcoming second-quarter earnings season. Furthermore, uncertainty loomed over the Federal Reserve’s monetary policy direction. This report provides a comprehensive analysis of key market indicators, including stock performance, economic surveys, manufacturing data, treasury yields, currency exchange rates, and the latest developments in commodities and digital assets.
Wall Street’s Mixed Performance as Investors Weigh Economic Data:
On Monday, Wall Street closed the shortened session with slight gains, accompanied by a rise in U.S. Treasury yields. The Nasdaq Composite led the gains, while the Dow Jones Industrial Average remained virtually unchanged. The market struggled for direction as the Independence Day holiday approached, with investors keeping a close eye on the upcoming earnings season and the Federal Reserve’s monetary policy decisions.
Japan’s Nikkei Hits 33-Year High:
In a positive development, Japan’s Nikkei index reached its highest level in 33 years. The Bank of Japan’s survey revealed an improvement in business sentiment during the second quarter. However, China’s Caixin manufacturing survey showed a slight dip to 50.5, indicating a slowdown in factory activity. While this figure surpassed market forecasts, it underscored the overall weakening economic trend in China.
U.S. Manufacturing Slumps, Construction Spending Surges:
According to a survey released on Monday, U.S. manufacturing slumped further in June, reaching levels last seen during the initial wave of the COVID-19 pandemic. The survey also highlighted a deflation in price pressures at the factory gate. Conversely, U.S. construction spending in May exceeded expectations, driven by a severe shortage of houses and a boost in single-family homebuilding.
Equity Indices Rally After Cooler Inflation Reading:
Following a cooler U.S. inflation reading on Friday, all three major equity indices experienced a sharp rally. The tech-heavy Nasdaq achieved its biggest first-half gain in 40 years. Specifically, the Dow Jones Industrial Average rose by 10.87 points (0.03%) to 34,418.47, the S&P 500 gained 5.21 points (0.12%) to 4,455.59, and the Nasdaq Composite added 28.85 points (0.21%) to 13,816.77.
U.S. Treasury Yields Show Modest Increase:
U.S. Treasury yields rose slightly in light trading on Monday, reversing a brief decline prompted by data revealing a continued slump in the manufacturing sector. Notably, the U.S. Treasury yield curve reached its deepest inversion since the high inflation era of Fed Chairman Paul Volcker. This inversion reflects the financial markets’ concerns regarding an extended rate-hiking cycle by the Federal Reserve, potentially leading the United States into a recession.
Currency Market Updates:
The U.S. Dollar experienced minimal change but gained against the Japanese Yen, which remains under intervention watch due to excessive currency market movements. The Dollar Index rose by 0.039%, with the EUR/USD pair declining by 0.01% to 1.0909. Meanwhile, the USD/JPY pair rose by 0.26% to 144.70, and the GBP/USD pair traded at 1.2684, down 0.16% for the day.
Upcoming Key U.S. Data: June Payrolls Report:
Investors eagerly await the release of the June payrolls report, scheduled for Friday. Median forecasts predict a slight decline in the unemployment rate to 3.6%, while job growth is expected to reach 225,000 after May’s surprisingly strong figure of 339,000. This data will be crucial in assessing the health of the U.S. labor market.
Oil and Gold Price Movements:
Oil prices settled lower on Monday, reversing earlier gains due to concerns surrounding a slowing global economy and possible U.S. interest-rate hikes. Supply cuts announced by top exporters Saudi Arabia and Russia for August failed to outweigh these worries. West Texas Intermediate (WTI) crude settled down by 1.2% at $69.79 per barrel, while Brent crude fell by 1.01% to $74.65.
Gold prices remained relatively stable on Monday, as weaker economic readings raised doubts about the Federal Reserve’s commitment to its hawkish policy outlook. Spot gold edged up by 0.1% to $1,921.19 per ounce, while COMEX gold futures fell slightly by 0.01% to $1,921.00 per ounce.
Digital Assets Continue to Show Positive Momentum:
Major digital assets experienced overall gains on Monday, with Bitcoin (BTC) hovering around the $31,000 level. Over the past 24 hours, BTC saw a 1.4% increase, trading between a low of $30,397 and a high of $31,136. Ethereum (ETH) also rose by 2.4% to $1,963, reaching its highest level since May 6, with a peak of $1,974. Year-to-date, Bitcoin and Ethereum have gained 87% and 64%, respectively, outperforming the Nasdaq 100 index (38% gain) and the S&P 500 index (16% increase).