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Investment Daily: US stocks and Treasuries ended lower

8 August 2024

Key takeaways

  • US stocks and Treasuries fell.
  • European stocks rose while government bonds fell.
  • Asian stocks rose.

Markets

US equities reversed earlier gains to end lower on Wednesday, led by losses in technology, consumer discretionary and healthcare shares. The S&P 500 closed down 0.8%.

US Treasuries fell after a weak 10-year Treasury debt auction and amid a slew of corporate bond issuance. 10-year yields rose 5bp to 3.94%.

European stock markets rebounded on Wednesday following the selloff in global stock markets earlier in the week. The Euro Stoxx 50 rose 2.0% led by financial and energy stocks. The German DAX rose 1.5% and the French CAC rose 1.9%. In the UK, the FTSE-100 closed 1.7% higher.

European government bonds fell as yields continued to bounce back from multiple-month lows seen earlier this week. 10-year German yields rose 7bp to 2.27% while 10-year French yields increased 5bp to 3.01%. In the UK, 10-year gilt yields were up 3bp to 3.95%.

Asia stock markets broadly advanced on Wednesday as the Japanese yen weakened following a BoJ official’s comments, helping ease investor worries over further carry trade unwinding amid recent volatile market moves. Japan’s Nikkei 225 and Korea’s Kospi rallied 1.2% and 1.8%, respectively. Hong Kong’s Hang Seng rose 1.4%, with China’s Shanghai Composite edging up 0.1% on mixed Chinese trade data. Elsewhere, India’s Sensex added 1.1% before today’s central bank policy decision.     

Crude oil prices rose on Wednesday, amid concerns over geopolitical risks in the Middle-East. WTI crude for September delivery settled 2.8% higher at USD75.2 a barrel.

Key Data Releases and Events

Releases yesterday

German industrial production rose 1.4% mom in June, exceeding expectations, but that only partially reversed May’s 3.1% mom decline. This is consistent with disappointing Q2 flash GDP data, and weaker export readings.

China’s trade surplus narrowed to USD 84.7bn in July from USD99.1bn in June amid softer-than-expected exports and a pickup in imports. 

Releases due today (8 August 2024)

Resilient economic growth should allow the Reserve Bank of India (RBI) to focus on its price stability mandate and keep policy rates unchanged.

In Mexico, headline inflation has risen through much of 2024 but core inflation has continued to trend lower. Combined with the effects of recent peso depreciation effects, the Banxico decision will likely be a close call.

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