MARKETS AT A GLANCELAST CHANGE % CHG DJIA 17598.2 -91.66 -0.52% Nasdaq 5115.38 -12.9 -0.25% S&P 500 2098.04 -5.8 -0.28% Japan: Nikkei 225 20548.1 -37.13 -0.18% Hang Seng 24411.4 -224.86 -0.91% Shanghai Composite 3622.91 -40.82 -1.11% S&P BSE Sensex 28187.1 72.5 0.26% Australia: S&P/ASX 5679.3 -19.9 -0.35% UK: FTSE 100 6688.62 -7.66 -0.11% PRICE CHG YIELD U.S. 2 Year 0/32 0.669 U.S. 5 Year 2/32 1.517 U.S. 10 Year 9/32 2.15 Australia 10 Year 23/32 2.772 China 10 Year -3/32 3.54 India 10 Year -6/32 7.976 Japan 10 Year -2/32 0.416 German 10 Year 6/32 0.591 LAST(MID) CHANGE Australia $ (AUD/USD) 0.7287 0.0001 Yen (USD/JPY) 124.03 0 S. Korean Won (USD/KRW) 1170.94 -0.1 Chinese Yuan (USD/CNY) 6.2102 -0.001 Euro (EUR/USD) 1.0953 0.0002 WSJ Dollar Index 88.85 -0.01 LAST CHANGE % CHG Crude Oil 45.35 -1.77 -3.76% Brent Crude 49.64 -2.57 -4.92% Gold 1086 -9.1 -0.83%
(Data as of approximately 5 p.m. ET)
SNAPSHOT:
U.S. sttocks declined, dragged down by steepening declines in the price of oil. Yields on benchmark 10-year U.S. government debt fell as a disappointing manufacturing report cast doubt on the Federal Reserve's plan to raise rates as soon as September. The dollar edged higher ahead of Friday's U.S. jobs report. Gold prices traded lower amid a selloff in commodities.
OPENING CALL:
While economists don't expect the Reserve Bank of Australia to cut interest rates at its monetary policy meeting Tuesday, many still expect an easing before the end of the year as the economy continues to grow slowly and inflation stays benign. Shane Oliver, chief economist at AMP Capital, said the risks of a further rate cut are considerable as investment remains weak and the economy remains at a crawl. Expectations for further China equity correction, declining commodity prices and the buildup to the U.S. Federal Reserve's liftoff are likely to weigh heavily on the RBA. Still, housing data out Monday highlighted risks for the RBA in cutting rates further, with house prices in Sydney rising quickly in July.
EQUITIES:
U.S. stocks fell, dragged down by steepening declines in the price of oil.
The selloff, which accelerated as the day went on, was sparked by ominous signs on the demand side that suggest the global economy may not ramp up enough to absorb all the oil in production. Over the past year, oil prices have tumbled more than 50%, and major stock indexes have often followed the commodity lower.
Energy companies in the S&P 500 were the biggest decliners in the index, falling 2%. Major oil companies Chevron Corp. and Exxon Mobil Corp., which led declines in the Dow industrials on Friday, continued to drag the market lower, falling 3.3% and 1.5%, respectively.
Part of the reason for the decline was data showing a gauge of Chinese factory-floor activity slumped to a two-year low. Adding to concerns, in the U.S. the Institute for Supply Management's manufacturing purchasing managers index declined.
As energy stocks fell, more defensive stocks, or stocks such as utilities and real-estate investment trusts that pay dividends and have bond-like characteristics, traded higher. Utilities companies were the top performers in the S&P 500, rising 0.6%, and the MSCI U.S. REIT Index, a benchmark for real-estate stocks, climbed 0.5%.
Investors digested a slew of data released related to the U.S. economy. The data was mixed. On the one hand, consumer spending rose 0.2% in June from a month earlier, in line with expectations, the Commerce Department said, and consumer prices rose slightly in June, according to the Federal Reserve's preferred inflation gauge. But the increase in consumer spending was the smallest since February, a sign that weak wage growth may be weighing on consumers.
Investors are waiting for a sustained pickup in consumer spending, which could spur earnings and stock prices for a wide swath of companies. The steep decline in oil prices over the past year should act as a driver for spending, many investors say, as consumers direct the money they have saved on gas elsewhere.
In corporate news, shares of auto makers climbed higher on strong July sales. Ford posted its best U.S. sales performance for the month since 2006, and Fiat Chrysler Automobiles NV said its U.S. auto sales rose 6.2% on the month on continued strength in its Jeep and Chrysler brands. Ford's stock added 0.7% while Fiat Chrysler rose 2.2%.
Tyson Foods Inc.'s stock fell 9.9% after the food company and largest U.S. meatpacker by sales missed expectations and cut its full-year outlook because of weak beef sales.
Asian shares fell Monday, as a measure of China's factory activity hit a two-year low and investors continue to seek clarity about Beijing's role in rescuing the stock market.
FOREX:
The dollar edged higher against the euro and the yen as investors anticipate a strong U.S. jobs report later in the week, which would push forward expectations for higher borrowing costs.
Investors continue to bet that an improving U.S. economy will persuade the Federal Reserve to raise short-term interest rates from near zero, a move that would make the dollar more attractive to yield-hungry investors. In doing so, the Fed would be the first major central bank to raise borrowing costs, while the European Central Bank and the Bank of Japan continue to ease policy to lift growth using measures that also weaken their respective currencies.
Traders and investors are looking to U.S. nonfarm payrolls numbers, which will be released Friday. Economists predict that the U.S. will have created 215,000 jobs last month versus 223,000 in June, the unemployment rate will hold steady at 5.3% and average hourly earnings will have risen 0.3% from a flat reading one month earlier.
Economists regard monthly job gains above 200,000 as consistent with strong employment growth. Investors predict the U.S. economy will continue to add jobs at this pace over the coming months, encouraging the Fed to lift rates in September.
"The market appears to be looking forward to a month of decent jobs gains; that's keeping the dollar afloat," said Sireen Harajli, foreign exchange strategist at Mizuho Bank.
The dollar's strong gains over much of the past year slowed in March after soft U.S. data raised doubts about the Fed's timing for raising interest rates. Investors on Monday largely looked past mixed numbers for U.S. manufacturing, construction, personal spending, income and inflation.
BONDS:
Yields on benchmark 10-year U.S. government debt fell to a two-month low as a disappointing manufacturing report cast further doubt on the Federal Reserve's plan to raise interest rates as soon as September.
Lower U.S. stocks and crude oil prices also boosted demand for safer U.S. government bonds.
The decline in yields extends the bond market's price recovery from a selloff during the second quarter when the 10-year yield hit a nine-month peak. Yields fall as prices rise.
The bond market's turnaround comes as Fed officials and investors are grappling with sluggish global economic growth, subdued inflation and highly accommodative monetary policy around the globe. A recent flare-up of the Greek debt crisis, jitters about China and concern about what softening commodities markets mean for global growth have all boosted demand for ultrasafe U.S. government debt.
Analysts point to solid U.S. employment as a factor that could allow the Fed to raise rates in September. Many investors say even a moderate increase by the Fed in its benchmark short-term interest rates could curtail U.S. growth as the economy has been recovering more slowly from the recent recession compared with precious cycles.
It marks the yield's lowest closing level since May 29. The yield has fallen after rising to 2.5% in June, the highest intraday level since September, and is now slightly below 2.173% traded at the end of 2014.
A market-based gauge of 10-year U.S. inflation expectations in the Treasury bond market fell to the lowest level since March as crude oil futures sold off. Inflation is the main threat to the value of longer-dated bonds as it chips away their fixed return over time.
The 10-year break-even rate, the yield spread between a 10-year Treasury note and a 10-year Treasury inflation protected security, was 1.70 percentage point, the lowest level since March. The level suggests that investors expect the U.S. inflation rate to be running at an annualized 1.70% on average within a decade. A month ago it was 1.91%.
U.S. bond funds and exchange-traded funds targeting Treasury debt have attracted net cash inflow for six consecutive weeks, the longest stretch since June 2012. In the Treasury futures market, the value of wagers investors place to bet on bond prices to rise further has risen to the highest level since April 2013, just one month before the bond market was rattled by the taper tantrum, or fears over a cutback from the Fed's bond-buying program.
Mixed U.S. data also raised some question on the Fed's timing to raise rates. Monday's report showed the monthly manufacturing index fell to 52.7 last month from 53.5. It followed Friday's release showing 0.2% rise in the employment-cost index Friday, the smallest in three decades and pointing to sluggish wage inflation.
The odds of a rate increase by the Fed at the September policy meeting were 36%, compared with 40% on Friday and 38.6% a week ago, according to traders. The calculations are based on implied yields from Fed-funds futures which are used by investors and traders to place bets on central-bank policy.
COMMODITIES:
(MORE TO FOLLOW) Dow Jones Newswires
August 03, 2015 17:35 ET (21:35 GMT)
LAST CHANGE % CHG
DJIA 17598.2 -91.66 -0.52%
Nasdaq 5115.38 -12.9 -0.25%
S&P 500 2098.04 -5.8 -0.28%
Japan: Nikkei 225 20548.1 -37.13 -0.18%
Hang Seng 24411.4 -224.86 -0.91%
Shanghai Composite 3622.91 -40.82 -1.11%
S&P BSE Sensex 28187.1 72.5 0.26%
Australia: S&P/ASX 5679.3 -19.9 -0.35%
UK: FTSE 100 6688.62 -7.66 -0.11%
PRICE CHG YIELD
U.S. 2 Year 0/32 0.669
U.S. 5 Year 2/32 1.517
U.S. 10 Year 9/32 2.15
Australia 10 Year 23/32 2.772
China 10 Year -3/32 3.54
India 10 Year -6/32 7.976
Japan 10 Year -2/32 0.416
German 10 Year 6/32 0.591
LAST(MID) CHANGE
Australia $ (AUD/USD) 0.7287 0.0001
Yen (USD/JPY) 124.03 0
S. Korean Won (USD/KRW) 1170.94 -0.1
Chinese Yuan (USD/CNY) 6.2102 -0.001
Euro (EUR/USD) 1.0953 0.0002
WSJ Dollar Index 88.85 -0.01
LAST CHANGE % CHG
Crude Oil 45.35 -1.77 -3.76%
Brent Crude 49.64 -2.57 -4.92%
Gold 1086 -9.1 -0.83%
MARKETS AT A GLANCE (Data as of approximately 5 p.m. ET)
SNAPSHOT:
U.S. sttocks declined, dragged down by steepening declines in the price of oil. Yields on benchmark 10-year U.S. government debt fell as a disappointing manufacturing report cast doubt on the Federal Reserve's plan to raise rates as soon as September. The dollar edged higher ahead of Friday's U.S. jobs report. Gold prices traded lower amid a selloff in commodities.
OPENING CALL:
While economists don't expect the Reserve Bank of Australia to cut interest rates at its monetary policy meeting Tuesday, many still expect an easing before the end of the year as the economy continues to grow slowly and inflation stays benign. Shane Oliver, chief economist at AMP Capital, said the risks of a further rate cut are considerable as investment remains weak and the economy remains at a crawl. Expectations for further China equity correction, declining commodity prices and the buildup to the U.S. Federal Reserve's liftoff are likely to weigh heavily on the RBA. Still, housing data out Monday highlighted risks for the RBA in cutting rates further, with house prices in Sydney rising quickly in July.
EQUITIES:
U.S. stocks fell, dragged down by steepening declines in the price of oil.
The selloff, which accelerated as the day went on, was sparked by ominous signs on the demand side that suggest the global economy may not ramp up enough to absorb all the oil in production. Over the past year, oil prices have tumbled more than 50%, and major stock indexes have often followed the commodity lower.
Energy companies in the S&P 500 were the biggest decliners in the index, falling 2%. Major oil companies Chevron Corp. and Exxon Mobil Corp., which led declines in the Dow industrials on Friday, continued to drag the market lower, falling 3.3% and 1.5%, respectively.
Part of the reason for the decline was data showing a gauge of Chinese factory-floor activity slumped to a two-year low. Adding to concerns, in the U.S. the Institute for Supply Management's manufacturing purchasing managers index declined.
As energy stocks fell, more defensive stocks, or stocks such as utilities and real-estate investment trusts that pay dividends and have bond-like characteristics, traded higher. Utilities companies were the top performers in the S&P 500, rising 0.6%, and the MSCI U.S. REIT Index, a benchmark for real-estate stocks, climbed 0.5%.
Investors digested a slew of data released related to the U.S. economy. The data was mixed. On the one hand, consumer spending rose 0.2% in June from a month earlier, in line with expectations, the Commerce Department said, and consumer prices rose slightly in June, according to the Federal Reserve's preferred inflation gauge. But the increase in consumer spending was the smallest since February, a sign that weak wage growth may be weighing on consumers.
Investors are waiting for a sustained pickup in consumer spending, which could spur earnings and stock prices for a wide swath of companies. The steep decline in oil prices over the past year should act as a driver for spending, many investors say, as consumers direct the money they have saved on gas elsewhere.
In corporate news, shares of auto makers climbed higher on strong July sales. Ford posted its best U.S. sales performance for the month since 2006, and Fiat Chrysler Automobiles NV said its U.S. auto sales rose 6.2% on the month on continued strength in its Jeep and Chrysler brands. Ford's stock added 0.7% while Fiat Chrysler rose 2.2%.
Tyson Foods Inc.'s stock fell 9.9% after the food company and largest U.S. meatpacker by sales missed expectations and cut its full-year outlook because of weak beef sales.
Asian shares fell Monday, as a measure of China's factory activity hit a two-year low and investors continue to seek clarity about Beijing's role in rescuing the stock market.
FOREX:
The dollar edged higher against the euro and the yen as investors anticipate a strong U.S. jobs report later in the week, which would push forward expectations for higher borrowing costs.
Investors continue to bet that an improving U.S. economy will persuade the Federal Reserve to raise short-term interest rates from near zero, a move that would make the dollar more attractive to yield-hungry investors. In doing so, the Fed would be the first major central bank to raise borrowing costs, while the European Central Bank and the Bank of Japan continue to ease policy to lift growth using measures that also weaken their respective currencies.
Traders and investors are looking to U.S. nonfarm payrolls numbers, which will be released Friday. Economists predict that the U.S. will have created 215,000 jobs last month versus 223,000 in June, the unemployment rate will hold steady at 5.3% and average hourly earnings will have risen 0.3% from a flat reading one month earlier.
Economists regard monthly job gains above 200,000 as consistent with strong employment growth. Investors predict the U.S. economy will continue to add jobs at this pace over the coming months, encouraging the Fed to lift rates in September.
"The market appears to be looking forward to a month of decent jobs gains; that's keeping the dollar afloat," said Sireen Harajli, foreign exchange strategist at Mizuho Bank.
The dollar's strong gains over much of the past year slowed in March after soft U.S. data raised doubts about the Fed's timing for raising interest rates. Investors on Monday largely looked past mixed numbers for U.S. manufacturing, construction, personal spending, income and inflation.
BONDS:
Yields on benchmark 10-year U.S. government debt fell to a two-month low as a disappointing manufacturing report cast further doubt on the Federal Reserve's plan to raise interest rates as soon as September.
Lower U.S. stocks and crude oil prices also boosted demand for safer U.S. government bonds.
The decline in yields extends the bond market's price recovery from a selloff during the second quarter when the 10-year yield hit a nine-month peak. Yields fall as prices rise.
The bond market's turnaround comes as Fed officials and investors are grappling with sluggish global economic growth, subdued inflation and highly accommodative monetary policy around the globe. A recent flare-up of the Greek debt crisis, jitters about China and concern about what softening commodities markets mean for global growth have all boosted demand for ultrasafe U.S. government debt.
Analysts point to solid U.S. employment as a factor that could allow the Fed to raise rates in September. Many investors say even a moderate increase by the Fed in its benchmark short-term interest rates could curtail U.S. growth as the economy has been recovering more slowly from the recent recession compared with precious cycles.
It marks the yield's lowest closing level since May 29. The yield has fallen after rising to 2.5% in June, the highest intraday level since September, and is now slightly below 2.173% traded at the end of 2014.
A market-based gauge of 10-year U.S. inflation expectations in the Treasury bond market fell to the lowest level since March as crude oil futures sold off. Inflation is the main threat to the value of longer-dated bonds as it chips away their fixed return over time.
The 10-year break-even rate, the yield spread between a 10-year Treasury note and a 10-year Treasury inflation protected security, was 1.70 percentage point, the lowest level since March. The level suggests that investors expect the U.S. inflation rate to be running at an annualized 1.70% on average within a decade. A month ago it was 1.91%.
U.S. bond funds and exchange-traded funds targeting Treasury debt have attracted net cash inflow for six consecutive weeks, the longest stretch since June 2012. In the Treasury futures market, the value of wagers investors place to bet on bond prices to rise further has risen to the highest level since April 2013, just one month before the bond market was rattled by the taper tantrum, or fears over a cutback from the Fed's bond-buying program.
Mixed U.S. data also raised some question on the Fed's timing to raise rates. Monday's report showed the monthly manufacturing index fell to 52.7 last month from 53.5. It followed Friday's release showing 0.2% rise in the employment-cost index Friday, the smallest in three decades and pointing to sluggish wage inflation.
The odds of a rate increase by the Fed at the September policy meeting were 36%, compared with 40% on Friday and 38.6% a week ago, according to traders. The calculations are based on implied yields from Fed-funds futures which are used by investors and traders to place bets on central-bank policy.
COMMODITIES:
(MORE TO FOLLOW) Dow Jones Newswires
August 03, 2015 17:35 ET (21:35 GMT)
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