Market wrap:US equities rose, led by the technology sector – Westpac

Analysts at Westpac noted in a market wrap that US equities rose, led by the technology sector,  (the NASDAQ index up 0.6% to a fresh record high).

Key Quotes:

“The US dollar and short-term bond yields also rose before and after Fed Chair Powell’s upbeat testimony. US Fed Chair Powell made an uneventful appearance in front of the Senate Banking Committee, reiterating that, “for now – the best way forward is to keep gradually rising the federal funds rate.” On the economy he remained upbeat, citing accommodative financial conditions, a firm global picture and tax cuts. Powell noted uncertainties on trade policy, “it is difficult to predict the ultimate outcome of current discussions”, but despite that he felt the risks were “roughly balanced” with the most likely path for the economy being one of continued jobs gains and moderate inflation.”

“US industrial production jumped a solid 0.6% in June, but a large 0.4ppt downward revision to the prior month, taking May’s reading to -0.5%, portrays a less impressive picture. Most of June’s gain came from rebounding motor vehicle production which had fallen sharply in the prior month due to supplier disruptions. The National Association of Homebuilders sentiment survey held steady at an elevated 68.
UK employment data for May showed an expected drift back to +2.7%y/y in weekly ex-bonus earnings (peaked at 2.9%y/y in March). Though unemployment remained low at 4.2%, there was a minor +7.8k rise in jobless claims for June.”

“The GDT dairy auction was mixed, resulting in a 1.7% fall in prices overall, with whole milk powder up 1.5% and butter down 8.1%. The US dollar index is up 0.5% on the day. EUR fell from 1.1745 to 1.1650. USD/JPY rose from 112.25 to 112.90. AUD fell from 0.7435 to 0.7376, before bouncing back to 0.7390. NZD fell from 0.6840 to 0.6769, reversing all yesterday’s post-CPI data gains. AUD/NZD bounced off 1.0860 to 1.0895.”

“US 10yr treasury yields ranged sideways between 2.85% and 2.87%, while 2yr yields seemed to respond to the firmer data and Powell, rising from 2.59% to 2.61% – the highest level since 2008. Fed fund futures yields continued to price 1 ½ more hikes in 2018.”