In a market wrap, analysts at Westpac explained that equity markets rose on China policy optimism but bond yields and the US dollar were little changed.
Key Quotes:
“US equities opened sharply higher, helped by strong company earnings, but later pared gains, the S&P500 up 0.48%, and the NASDAQ 100 flat after making a fresh record high.”
“The US dollar index is unchanged on the day. EUR ranged between 1.1655 and 1.1715. USD/JPY ranged between 110.96 and 111.45. Outperformer AUD rose from 0.7360 to 0.7434 before consolidating. NZD similarly rose from 0.6770 to 0.6819. AUD/NZD rose from 1.0860 to 1.0917, helped by the quiet on the trade war front and gains in metals with copper at two week highs.”
“Markit’s preliminary composite US PMI fell to 55.9 in July from 56.2 the prior month, led by a weaker services sector PMI (-0.3pts to three month lows of 56.2, below consensus), while the manufacturing sub-index eked a small gain (+0.1pt gain to 55.5). Trade frictions are taking their toll; input costs in the composite PMI hit their highest level since Oct 2009 while supplier delivery times in the manufacturing sector, a gauge of bottlenecks, fell to 39 the lowest level since the series began.”
“Eurozone PMI (54.3, vs 54.8 expected an 54.9 previous) missed expectations despite a sizable rebound in Germany’s manufacturing PMI (57.3 vs exp. 55.5, prev. 55.9). Weaker than expected service sector PMI’s dragged down the composite levels, whilst Markit stressed the decline in orders, especially the drop in export orders, impacted both services and manufacturing.”
“US 10yr treasury yields preserved the previous day’s rise and nudged a little higher, from 2.95% to 2.97% – the highest since mid-June. 2yr yields rose from 2.62% to 2.64% – the highest since 2008. Fed fund futures yields are now pricing almost two more full hikes in 2018.”
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