US stocks extend losses on hawkish reiteration of Fed officials and Pelosi trip to Taiwan

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Oall Street ended lower for the second straight day of trading as US House Speaker Nancy Pelosi’s trip to Taiwan added geopolitical tensions and Fed officials reiterated price hikes. constant rates to fight inflation, which reduced the chances of a “Fed break” by the end of the year. According to the CEM FedWatch Tool, the probability of a 50 basis point rate hike in September fell to 60.5% from over 70% last week, while the probability of a 75 basis point hike increased to 39.5%. The yield on US 10-year bonds rose to 2.74% from 2.59% the day before, sending the US dollar higher and ending a three-day losing streak.

In Aisa, major indexes also fell due to heightened US-China tensions during the US official’s visit to Taiwan, with the Hang Seng index falling 2.36% and the CSI 300 index falling 1. .95% on Tuesday. Shares of Chinese tech giant Alibaba fell 2.84% in the Hong Kong market ahead of the earnings report later in the day. Asian futures point to a mixed open in today’s session.

AU and NZ day ahead

Due to a jump in the king dollar, the Australian and New Zealand dollars fell against the greenback, with AUD/USD falling more than 1%, just above 0.69 after the RBA raised the cash rate by another 50 basis points, as well as a sharp drop in Australian bond yields. The Reserve Bank revised Australian inflation expectations to 7.75% from a peak of 6% towards the end of the year, saying policy is not on a pre-plan trajectory, which has eased his warmongering position since the last political meeting.

S&P/ASX 200 futures fell 0.16%, indicating a slight open in today’s session. But advice from the RBA to slow rate hikes lifted local stock markets on Tuesday, with consumer stocks leading the gains. The banking sector also outperformed.

The S&P/NZX 50 continued its rebound trend on Tuesday, rising for the fourth straight session to 11,532.46, the highest in nearly three months. Shares of A2 milk jumped 12% following a report that the company received US FDA approval to sell its infant formula.

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The Dow Jones Industrial Average fell 1.22%, the S&P 500 fell 0.66% and the Nasdaq fell 0.16%. Chicago Fed President Charles Evans said the Fed is expected to raise the interest rate by 50 basis points in September, followed by a quarter percentage point thereafter through mid-2023, this which is more hawkish than market participants’ bets on a “Fed break” by the end of the year.

All 11 S&P 500 sectors ended in the red, led by materials and financials. A jump in short-term bond yields outpaced long-term yields, deepening the reversal in 2-year and 1-year yields, putting pressure on the banking sector. By contrast, growth sectors were relatively stronger, with Uber shares jumping 10% on a beat in the earnings estimate.

In after-hours trading, Starbucks shares rose more than 1.7% as the company beat earnings expectations. The coffee giant’s net sales rose 9% to $8.15 billion year-on-year. AMD shares fell 6% despite beating earnings estimates as CEO Lisa Su pointed to weaker PC business in the third quarter. Robinhood’s share price was slightly lower, although the company reported disappointing results while announcing another 23% job cut.

The performance of large companies overnight (August 02, 2022)

Source: CMC Markets NG

Europe

Major European indices fell on uncertainties caused by Pelosi’s trip to Taiwan. The Stoxx 50 (-0.59%), the FTSE 100 (-0.06%), the DAX (-0.23%), the CAC 40 (-0.42%). Read more

Goods

Crude oil fell slightly ahead of today’s OPEC+ meeting as traders eye a potential agreement by cartel members to boost production volume after September, while the president’s visit to Taiwan US House Pelosi added an element of risk to sentiment. The strengthening US dollar also put pressure on commodity markets.

WTI: US$93.68 per barrel (-0.21%), Brent: US$99.63 per barrel (-0.40%), Natural Gas: US$7.71 per MMBtu (-6.97% )

COMEX Gold Futures: US$1,776.2/oz (-0.64%), COMEX Silver Futures: US$19.93/oz (-2.12%) , copper futures: US$3.47 per ounce (-1.96%)

Wheat: US$774 per bushel (-3.28%), Soybeans: US$1,382.25 per bushel (-1.69%), Corn: US$593 per bushel (-2.75%).

Currencies

The U.S. dollar index rebounded after a three-day slump on comments from Fed officials. USD/JPY ended the recent losing streak, rising 1.2% to just above 133. All other currencies also weakened against the US Dollar. The Eurodollar lost nearly 1 US cent against the greenback, at 1.0172 at 08:40 AEST.

treasures

US and European bond yields rose amid the above factors. But Australian and New Zealand bond yields fell on the RBA’s less aggressive tone on rate hikes.

10-year US: 2.75%, 2-year US: 3.05%.

10-year German Bund: 0.81%, 10-year British Gilt: 1.86%.

Australia 10 years: 2.97%, New Zealand 10 years: 3.29%.

Cryptocurrencies

Crypto markets held up despite rising risk sentiment.

(See below prices at 8:03 AEST according to Coinmarketcap.com)

Bitcoin: $23,123 (+0.34%)

Ethereum: $1,650 (+1.63%)

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