Analysts at ANZ Bank New Zealand explained that US equities continued to climb higher after a strong showing by European bourses.
“US treasury yields were little changed and the USD fell. The S&P 500 hit an all-time high of 2932, with solid gains in materials, consumer staples and technology. The DJIA and NASDAQ were up almost 1%. European shares were led higher by CAC 40’s 1.1% climb while other major indices were up 0.5-1.0%. USD was sold across the G10 and emerging markets on news China is planning to cut tariff rates on some imports (further details below). NZD and SEK led gains in the G10. The US treasury curve flattened a touch with 2-year up 1.3bps and 10-year up 0.6bp. Oil was biased lower, gold slightly higher.
ANOTHER RUN OF SOLID US DATA: US labour market indicators are holding strong with jobless claims falling to 201k (mkt: 210k; last: 204k) and continuing claims dropping to 1645k (mkt: 1705k; last: 1700k). The Philadelphia Fed business outlook survey rebounded to 22.9 (mkt: 18; last: 11.9; and is better news for the ISM following the weak Empire State print earlier in the week). The employment component lifted to 17.6 (last: 14.3) and new orders to 21.4 (last: 9.9). Notably, there was a sharp fall in pricing data – prices received fell to 19.6 (last: 33.2) and prices paid to 39.6 (last: 55). Existing home sales were flat, but median prices were up 4.6% y/y and average prices up 3.0%. Meanwhile, the Leading Index rose 0.4% m/m in August with solid contributions from jobless claims and ISM new orders. This follows a firm 0.7% gain in July, suggesting Q3 growth is on track for another solid print.
RETAIL THERAPY: UK retail sales growth beat expectations in August, up 0.3% m/m (mkt: -0.2%; last: 0.9%) led by household goods and electronics and add to the firmer-than-expected CPI earlier this week. While the BoE is unlikely to change its stance on these data, the outlook is improving.”