- Market sentiment dwindles amid lack of major data/events, contrasting details.
- US data, slump in tech shares and firmer yields provide tailwind to riskier assets.
- PBoC’s defense of Yuan, upbeat Japan inflation fail to entertain markets amid China growth fears.
- S&P500 Futures stabilize after reversing from 16-month high, US Treasury bond yields fade late upside strength.
Most markets stabilize on early Friday, after witnessing a volatile Thursday, as traders seek fresh clues while preparing for the bumper week comprising top-tier central bank events during late July. Also challenging the momentum traders are the mixed headlines surrounding the US and China, as well as a light calendar.
Amid these plays, the S&P500 Futures remains sidelined after reversing from the highest levels since late March 2022, marked on Wednesday, up 0.05% on a day near 4,568 at the latest. That said, the US 10-year and two-year Treasury bond yields retreat to 3.84% and 4.82% after refreshing the weekly top with a stellar run-up the previous day.
It’s worth noting that the US Dollar Index (DXY) eases to around 100.75 after rising the most in a month the previous day whereas stocks in the Asia-Pacific zone edge lower. Furthermore, prices of Gold and WTI crude oil remain firmer around $1,972 and $76.00 amid cautious optimism and the US Dollar’s retreat.
That said, Wall Street witnessed a heavy sell-off in energy and technology shares after the top-tier companies reported downbeat updates. Also, positive surprises from the US employment clues underpinned the Treasury bond yields and triggered the first negative daily close of the S&P500 in four days.
Talking about the US data, the Initial Jobless Claims dropped to 228K for the week ended on July 14, the lowest since May, versus 237K prior and 242K market forecasts but the Continuing Jobless Claims rose to 1.754M for the said period compared to market forecasts of reprinting 1.729M figures. Additionally, the Philadelphia Fed Manufacturing Survey gauge improved to -13.5 for July from -13.7 prior, versus -10 expected while Existing Home Sales slumped -3.3% MoM in June compared to 0.2% prior gain.
It should be observed that US Building Permits and Housing Stars also reported downbeat figures for June whereas the Retail Sales growth eased despite posting upbeat details of Retail Sales Control Group for June. Despite the recently upbeat US employment clues, the US statistics haven’t been impressive to support the Fed in announcing more rate hikes past July in the next week, which in turn pushed back the market bears.
Elsewhere, fears of witnessing downbeat China growth weigh on the sentiment while the People’s Bank of China’s (PBoC) efforts to defend the world’s second-biggest economy prod the bears. On the same line, Bloomberg came out with news suggesting that Chinese policymakers are up for a step to favor the mortgage easing to spur homebuying in the major.
Looking ahead, a light calendar can restrict the Oil price upside ahead of the next week’s Federal Open Market Committee (FOMC) monetary policy meeting announcements.
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