Wall Street holds gains ahead of earnings, jobs data By Reuters
Published Jul 31, 2023 01:48
Updated Jul 31, 2023 23:45
© Reuters. FILE PHOTO: A man walks past an electric monitor displaying Nikkei share average and the Japanese yen exchange rate against the U.S. dollar outside a brokerage in Tokyo, Japan May 2, 2023. REUTERS/Issei Kato
By Lawrence Delevingne
(Reuters) -Wall Street and global stocks edged up on Monday while oil prices gained and the dollar was little changed, as traders looked ahead to corporate earnings and a key employment report due this week.
Apple Inc (NASDAQ:AAPL) and Amazon.com (NASDAQ:AMZN) both report on Thursday, while other well-known names with results due include Caterpillar Inc (NYSE:CAT), Starbucks Corp (NASDAQ:SBUX) and Advanced Micro Devices (NASDAQ:AMD).
European shares gained modestly after euro zone inflation fell further in July seeing that most measures of underlying price growth also eased. Markets took this as a comforting sign for the European Central Bank (ECB) as it considers ending a brutal string of interest rate hikes.
The pan-European STOXX 600 index rose by 0.12%, a second consecutive monthly gain. MSCI’s gauge of stocks across the globe gained 0.15%.
The modest gains came despite China’s manufacturing activity falling for a fourth straight month in July, as demand remained weak at home and abroad, official surveys showed on Monday.
“Markets are treating information with a lot more sensitivity and people are looking into new information with a detailed eye,” said Florian Ielpo, head of macro at Lombard Odier Investment Managers.
EYES ON THE HORIZON
Economic indicators that investors will be watching this week include the U.S. ISM surveys on manufacturing and services, as well as the July payrolls report.
“Data out this week should remain superficially consistent with the ‘soft landing’ narrative,” Citi market strategists wrote in a note. “But the potential return to upside surprises to job growth would raise questions about whether slowing inflation can coexist with tight labor markets.”
All three main U.S. indexes have posted recent gains as signs of cooling inflation and a resilient economy have eased investor sentiment about the economy surviving amid higher rates for longer.
Upbeat quarterly earnings from megacap growth companies including Alphabet (NASDAQ:GOOGL) and Meta Platforms as well as chipmakers Intel (NASDAQ:INTC) and Lam Research have also boosted investor sentiment.
Almost 30% of the S&P 500 reports results this week. The index is now up nearly 20% for the year.
Paul Christopher, Wells Fargo (NYSE:WFC) Investment Institute’s head of global investment strategy, urged caution given the potential for a weaker economy, slower disinflation and narrower corporate profits.
“This year’s impressive equity rally has been driven by strong sentiment, without either the earnings growth or the directional improvement in economic data to justify current market multiples and valuations,” Christopher wrote in a note.
Chicago Federal Reserve Bank President Austan Goolsbee on Monday said the U.S. central bank is “walking the line pretty well” on bringing inflation down without causing a recession, and will watch the data as September approaches to judge if more monetary tightening may be appropriate.
The Bank of England is widely expected to raise rates by at least a quarter point. Traders cut bets on a continuing rally in the pound by the most since mid-June ahead of the Bank of England rate decision on Thursday.
Sterling has surged 24% from a record low of $1.033 against the dollar in September after a disastrous budget, hitting a 15-month high of $1.314 in mid-July.
The dollar edged higher on Monday after a survey from the Federal Reserve showed U.S. banks reported tighter credit standards and weaker loan demand during the second quarter, a sign rising interest rates are having an impact on the economy.
The Japanese yen weakened about 0.8% versus the dollar. Investors continued to digest Friday’s decision by the Bank of Japan (BOJ) to lift the lid on bond yields in a step away from its ultra-easy policies.
Japanese 10-year yields surged to a nine-year high up to 0.6% on Monday, and toward the new cap of 1.0%.
U.S. Treasury yields were marginally lower, with investors waiting for employment data to assess the impact of the Fed’s monetary tightening campaign on the economy. The 10-year was down 1 basis point at 3.961%.
In commodities, gold prices rose, putting them on track for their best month in four, helped by a weaker dollar and expectations that major global central banks are nearing a peak with interest rate hikes. Spot gold added 0.3% to $1,965 an ounce [GOL/]
Oil prices rallied to a fresh three-month high and recorded their steepest monthly gains since January 2022, supported by signs of tightening global supply and rising demand through the rest of this year.
Wall Street holds gains ahead of earnings, jobs data
© 2007-2023 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.