CURRENCY MARKET WRAP
As of Thu Aug 1st, Singapore Time zone UTC+8
Dollar Index +0.57%, 98.61
USDJPY, +0.19%, $108.82
EURUSD, -0.75%, $1.1071
GBPUSD, +0.02%, $1.2154
USDCAD, +0.36%, $1.3196
AUDUSD, -0.39%, $0.6845
NZDUSD, -0.94%, $0.6551
U.S. The July Chicago PMI came in at 44.4 consensus 50.5), slipping further into contraction territory after coming in at 49.7 in June. A reading below 50.0 denotes a contraction.
In FOMC, the Fed cited economic uncertainties and inflation levels that were running below its target for its rate decision. Two voting members (George and Rosengren), however, did dissent to the rate cut, preferring to keep rates unchanged. The Fed also noted that it will end its balance sheet reduction efforts in August, two months earlier than previously indicated.
The directive stirred some volatility in the market, but Fed Chair Powell’s ensuing press conference then caused the real volatility after he used phrases like “insurance” and “mid-cycle adjustment” to describe the Fed’s first rate cut since 2008. Stocks fell sharply before the Fed Chair abated selling pressure by saying that his description didn’t mean “just one rate cut.” Powell’s clarification wasn’t enough to completely ease investors, though. All 11 S&P 500 sectors finished lower, including noticeable declines in the consumer staples (-2.0%), materials (-1.5%), and information technology (-1.5%) sectors.
U.S. Treasuries also experienced noticeable movements, ultimately flattening the yield curve by session’s end. The 2-yr yield, which touched 1.80% prior to the press conference, finished three basis points higher to 1.88%. The 10-yr yield finished near its lows, declining four basis points to 2.02%. The U.S. Dollar Index rose 0.57% to 98.61. WTI crude increased 0.6% to $58.38/bbl.
STOCK MARKET WRAP
S&P500, -1.09%, 2,980.38
Nasdaq, -1.30%, 7,848.78
Nikkei Futures, -1.53%, 21,328.0
S&P 500 fell as much as 1.8% on Wednesday after Powell indicated that the July rate cut was not the start of an easing cycle. Stocks did rally off lows, though, after Powell quickly suggested that policy could still accommodate another cut if necessary. The S&P 500 finished lower by 1.09%.
Prior to the Fed’s decision to cut the target range for the fed funds rate by 25 basis points to 2.00% to 2.25%, there wasn’t much conviction from buyers or sellers in the market. The major indices traded marginally higher, mainly supported by the positive price action in Apple (AAPL 213.04, +4.26, +2.0%) following its results and guidance.