Daily summary: weak macro data puts pressure on Wall Street 🔴

17:56 1 August 2024
  • Wall Street ends the day in bearish moods. We observe a sell-off in stocks throughout the day, with an acceleration of declines following the publication of the ISM report for the US manufacturing sector.

  • The sell-off is particularly noticeable in small-cap stocks (US2000) and the technology stock index (US100). Both indices recorded significant gains in recent weeks. US100 is down 3.30% and US2000 is down even 3.65%.

  • Despite weak ISM data and from the labor market, the dollar index gains 0.35% as capital flows into safe assets.

  • 10-year bonds are also losing significantly, falling below the 4.00% level. TNOTE futures, which track the price of 10-year bonds, gain 0.35% to a level of 112.70 points.

  • The ISM manufacturing report for July showed a decline in sentiment to 46.8 against forecasts of 48.8 and 48.5 in June. The price sub-index was the only one above forecasts at 52.9 versus 51.8 expectations and 52.1 previously. Employment and new orders indices performed poorly.

  • Jobless claims stand at 249k versus expectations of 236k and 235k previously. The data also confirms a weakening labor market, but the key NFP report will be released tomorrow.

  • Weaker data weakens the dollar, and the surprisingly elevated price index makes today's reading not particularly favorable for the stock market. Nonetheless, today's macro data from the US is dovish.

  • The Bank of England cuts interest rates to 5% vs. 5% forecasts and 5.25% previously. The decision was not unanimous; 4 BoE members voted to keep rates, and 5 for a 25 basis points cut. Despite the rate cut, BoE Governor Bailey indicated caution to avoid easing policy too quickly or on too large a scale.

  • Futures on the Japanese Nikkei index (JAP2250) are down nearly 4%. The market is selling off stocks benefiting from the FX effect of Japanese exporters amid yen strengthening and Nasdaq pullback.

  • The cryptocurrency market is also experiencing a significant sell-off. Bitcoin is down 3.00% to $62,500, and Ethereum is down 4.00% to $3,100. In both cases, prices are approaching important support levels.

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