CURRENCY MARKET WRAP
As of Thu Jul 25th, Singapore Time zone UTC+8
Dollar Index -0.02%, 97.68
USDJPY, -0.03%, $108.18
EURUSD, -0.10%, $1.1142
GBPUSD, +0.35%, $1.2481
USDCAD, +0.04%, $1.3139
AUDUSD, -0.42%, $0.6975
NZDUSD, -0.08%, $0.6698
U.S. Treasury yields finished lower on Wednesday. The 2-yr yield declined one basis point to 1.82%, and the 10-yr yield declined two basis points to 2.05%. The U.S. Dollar Index was unchanged at 97.72. WTI crude lost 1.4% to $55.93/bbl.
Concerns about the growth environment remain significant after Eurozone and U.S. PMIs came in below expectations. German Flash Manufacturing PMI came in at 43.1 vs expected 45.1. Europe’s Flash Manufacturing PMI at 46.4 vs expected 47.6. U.S. Flash Manufacturing PMI at 50.0 vs expected 50.9. The PMI signals a weakening inflation outlook with easing input prices on the industrial side. This has its impact on selling prices as businesses indicate slower inflation from both the industry and service sector side. As inflation pressures decline, the inflation outlook seems to be weakening if anything at the moment.
Later today, the ECB is expected to keep its monetary policy unchanged, but is widely anticipated to update its forward guidance to signal some form of easing at its next meeting in September.
STOCK MARKET WRAP
S&P500, +0.47%, 3,019.56
Nasdaq, +0.70%, 8,010.60
Nikkei Futures, +0.64%, 21,738.0
S&P 500 (+0.47%) and Nasdaq (+0.70%) set new record highs on Wednesday, boosted by out-sized gains in the semiconductor stocks and by shares of companies that beat earnings estimates. The Russell 2000 rose 1.6%. The Dow Jones Industrial Average, however, lost 0.3% amid noticeable losses in Boeing (BA 361.43, -11.54, -3.1%) and Caterpillar (CAT 131.91, -6.19, -4.5%) following disappointing earnings reports.
The advance began in the afternoon, as the market began to shake off several early concerns and instead rally around the host of companies that did provide good earnings news. Some of those concerns included the Department of Justice announcing a probe into the “market-leading online platforms,” the weaker-than-expected eurozone flash manufacturing PMI for July, and Caterpillar lowering its full-year EPS guidance.
Notable earnings-related gainers included Visa (V 183.33, +2.43, +1.3%),UPS (UPS 114.39, +9.12, +8.7%), Texas Instruments (TXN 129.00, +8.93, +7.4%), Northrop Grumman (NOC 342.97, +18.98, +5.9%), Chipotle Mexican Grill (CMG 777.96, +38.36, +5.2%), and Snap (SNAP 17.61, +2.78, +18.8%). The market’s ability to find support in these companies was encouraging for investors worried about market leadership being too concentrated among a handful of tech giants.
The S&P 500 communication services (+0.9%) and financials (+0.9%) sectors were the day’s best-performing sectors. Semiconductor stocks had a field day, rallying on Texas Instruments’ solid results. The Philadelphia Semiconductor Index advanced 3.1%, boosting its year-to-date gain to a staggering 40%. Conversely, the consumer staples (-0.6%), real estate (-0.1%), and materials (-0.02%) sectors finished lower.
Separately, for most of the day, the DoJ regulatory threat weighed on shares of Facebook (FB 204.66, +2.30, +1.1%), Amazon (AMZN 2000.81, +6.32, +0.3%), Alphabet (GOOG 1137.81, -8.40, -0.7%), and Apple (AAPL 208.67, -0.17, -0.1%). The FTC also confirmed that Facebook will pay a $5 billion fine for its privacy mishaps, but the stock still rallied heading into its earnings report after the close.