Wall Street gave back its pre-market gains as investors remained cautious after the worst week for global stock markets since March. Stocks in Asia closed mostly higher, while Europe's broad Stoxx 600 index extended losses.
Investors remain concerned that recent labor market data showed hiring remains strong, which could further fuel bets that the Fed will tighten further. Analysts estimate that the U.S. added 200,000 jobs in July. While that would be the lowest since the end of 2020, it is still in the upper range historically. The latest data from ADP shows that demand for workers continues as the labor market remains tight.
Treasury yields rose sharply this week, which also supported the USD. The U.S. government will increase quarterly bond sales to $103 billion, more than expected, which will likely lead to a further rise in yields as traders are unsettled about the increased supply of bonds.
According to Bank of America, clients are pulling out of equities as the risk of an economic downturn remains high. BofA strategist Michael Hartnett said, “Retail clients are moving back into risk-off mode (…).”
Apple's market value will fall back below the historic $3 trillion mark as the iPhone opens lower following its third consecutive quarterly report of declining sales. Apple has failed to grow sales since 2021 – while its stock price has skyrocketed. On a positive note, however, sales in China were strong and Apple reported record iPhone sales in India. Amazon is trading 8.7% higher in pre-market trading after the world's largest e-commerce and cloud services company's revenue beat estimates.
Depending on the NFP – which is unlikely to be weak – I still see investors nervous. There could be more selling towards the end of the week as investors remain cautious. However, hopes that Beijing will soon announce more stimulus measures provide some tailwind to the global market.
Oil prices remain near a 3 1/2-month high. Gold continues to find no support in the face of high U.S. Treasury yields. Industrial metals remain weak despite a small bounce in Chinese equities and hopes for further stimulus measures.
👁 ROB'S MARKET OVERVIEW:
August 4, 2023
🇺🇸 US Markets ↕️
Cyclical Stocks ↕️
Tech/Growth Stocks ↕️/↘️
Financial Stocks ➡️
Defensive Stocks ➡️/↗️
Energy Stocks ➡️/↗️
Materials Stocks ➡️
💱 Forex
USD ➡️/↗️
EUR, GBP ➡️
AUD ➡️ (stabilizing / slightly rebounding after recent losses)
CHF, JPY, CAD ➡️/↘️
⚒ Commodity Markets ↕️
Oil prices ➡️/↗️ (oil market remains tight)
Natural Gas prices ➡️
Metal prices ➡️/↘️
Precious Metal prices ➡️ (reduced downside potential with yields stabilizing)
⚡️Cryptos ➡️/↘️ (risk-off mood)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
Yours, Robert
