CURRENCY MARKET WRAP
As of Fri Aug 2nd, Singapore Time zone UTC+8
Dollar Index -0.19%, 98.42
USDJPY, -1.21%, $107.43
EURUSD, +0.03%, $1.1079
GBPUSD, -0.29%, $1.2124
USDCAD, +0.15%, $1.3211
AUDUSD, -0.63%, $0.6802
NZDUSD, -0.08%, $0.6553
U.S. ISM Manufacturing Index for July checked in at 51.2% (consensus 51.9%) after crossing at 51.7% in June. The dividing line between expansion and contraction is 50.0%, so the July reading indicates slower growth in the manufacturing sector. The July reading is the lowest level since August 2016. Total construction spending declined 1.3% in June (consensus +0.4%) following an upwardly revised 0.5% decline (from -0.8%) in May. This was the second straight monthly decline and the third straight year-over-year decline in construction spending, which is something that hasn’t been seen since 2011.
In trade, Trump on Thursday moved to impose a 10% tariff on a remaining US$300 billion list of Chinese imports starting Sept. 1, after U.S. and Chinese negotiators failed to kickstart trade talks.“Trade talks are continuing, and during the talks the U.S. will start, on September 1st, putting a small additional Tariff of 10per cent on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25per cent,” Trump tweeted. The IMF has warned that tariffs already in place will shave 0.2% off global economic output in 2020.
Economic growth concerns were made most apparent in the steep drop in U.S. Treasury yields and oil prices ($53.99/bbl, -$4.39, -7.5%), both of which had already been on the decline in the wake of the Fed’s rate cut yesterday. The 2-yr yield dropped 16 basis points to 1.72%, and the 10-yr yield dropped 13 basis points to 1.89%. The U.S. Dollar Index lost 0.19% to 98.42.
STOCK MARKET WRAP
S&P500, -0.90%, 2,953.56
Nasdaq, -0.61%, 7,801.15
Nikkei Futures, -2.17%, 21,083.0
Stock market gave up a healthy lead and finished noticeably lower on Thursday after Trump announced a 10% tariff rate on another $300 billion of Chinese imports, effective September 1. The S&P 500 had nearly recovered all its losses from Wednesday, but renewed growth and trade concerns left the benchmark index down 0.9% for the session.
Concerns that trade tensions would undercut corporate earnings prospects were evident in the following groups: The S&P 500 industrials sector (-2.0%), which is home to many transportation companies with foreign business;Apple (AAPL 208.43, -4.61, -2.2%), which previously had some of its high-growth products except from tariffs; and the semiconductor stocks, many of which derive a large of portion of their revenue from China.