CURRENCY MARKET WRAP
As of Tue Jul 2nd, Singapore Time zone UTC+8
Dollar Index +0.70%, 96.81
USDJPY, +0.45%, $108.38
EURUSD, -0.73%, $1.1287
GBPUSD, -0.40%, $1.2644
USDCAD, +0.32%, $1.3135
AUDUSD, -0.76%, $0.6966
NZDUSD, -0.70%, $0.6672
Markets started positively on Monday after Saturday’s meeting between Trump and President Xi. While the meeting did not yield concrete steps toward reaching a trade deal, it also did not lead to an escalation of the dispute. Instead, Trump agreed to relax restrictions on sales of components to Huawei and agreed to not impose additional tariffs on imports from China at this time.
The economic situation in major export centers remains weak. To that point, China’s Manufacturing PMI (actual 49.4 from 50.2) remained in contractionary territory in the final June reading, Japan’s Manufacturing PMI decreased to 49.3 from 49.5, and the Manufacturing PMI for the eurozone slipped to 47.6 from 47.8. Adding additional weight to the gloomy sentiment on exports, South Korea reported that its exports decreased 13.5% yr/yr in June. To be fair, the U.S. ISM Manufacturing Index also decreased in June (to 51.7 from 52.1), but it remained in expansionary territory, serving as a reminder that the U.S. economy is still a pocket of relative strength.
Relative strength in U.S. data gave a boost to the U.S. Dollar Index, which climbed 0.51% to 96.81, reclaiming its 200-day moving average in the process. Treasuries ended in the red with shorter tenors leading the retreat. The 10-yr yield rose three basis points to 2.03% while the 2-yr yield rose five basis points to 1.79%.
STOCK MARKET WRAP
S&P500, +0.77%, 2,964.33
Nasdaq, +1.27%, 7,768.14
Nikkei Futures, +0.11%, 21,667.5
Stock market began the week on a higher note, but the major averages were only able to keep a portion of their gains through the close. The S&P 500 gained 0.77% after being up 1.0% at the start while the tech-heavy Nasdaq rose 1.1% after starting the session with a 1.7% gain.
Stocks surged out of the gate with chipmakers leading the opening rally, which was not a surprise given the group’s sensitivity to trade-related matters. The PHLX Semiconductor Index was up nearly 5.0% at the start of the session but trimmed its gain to 2.7% by the close. Huawei supplier Inphi (IPHI 53.67, +3.57, +7.1%) was the top performer within the group, rallying 7.1%. Semiconductor giant, Intel (INTC 48.05, +0.18, +0.4%), jumped above its 200-day moving average (48.85) at the start, but narrowed its gain to just 0.4% as the session wore on.