As of this morning, the futures for the September E-Mini S&P 500 and the September Nasdaq 100 E-Mini are up by 0.33% and 0.47% respectively.
Stock indexes are experiencing modest gains today, primarily driven by an 8% surge in Amazon.com during pre-market trading, which is boosting technology stocks. However, these gains are tempered by Apple’s stock, which is down over 2% due to a lackluster outlook for its fourth quarter. The U.S. unemployment report showed mixed results, with July nonfarm payrolls rising less than expected, but average hourly earnings increasing more than anticipated, raising concerns about wage pressures.
Specifically, U.S. nonfarm payrolls for July rose by 187,000, falling short of the expected 200,000 figure, leading to a slightly dovish sentiment regarding Federal Reserve policy. On the other hand, the July unemployment rate unexpectedly declined by 0.1 to 3.5%, indicating a stronger labor market than the projected 3.6%.
The markets are currently pricing in a 19% probability of a 25 basis point rate hike at the September 20 FOMC meeting.
Global bond yields are showing mixed trends, with the 10-year T-note yield retreating from an 8-3/4 month high of 4.204% to 4.155%, while the 10-year German bund yield rose to a 3-week high of 2.651% and the 10-year UK gilt yield declined to 4.457%.
Overseas stock markets are experiencing mixed performance, with the Euro Stoxx 50 down 0.15%, China’s Shanghai Composite Index up 0.23%, and Japan’s Nikkei Stock Index up 0.10%.
In the Euro Stoxx 50, a rise in European government bond yields is weighing on stocks, and an unexpected decline in Eurozone retail sales is adding to the bearish sentiment. However, the strength in bank stocks, particularly Credit Agricole SA, which reported better-than-expected Q2 earnings, is limiting losses. Additionally, travel stocks are performing well, supported by Booking Holdings’ stronger-than-expected Q2 revenue, demonstrating robust travel demand despite higher flight and hotel prices. Furthermore, German factory orders have surged by the most in three years in June, providing a positive signal for the Eurozone’s largest economy.
China’s Shanghai Composite Index is moderately higher, with brokerage stocks rallying for a second day after the Securities Depository and Clearing Corp made a larger-than-expected cut in the reserve payment ratio for stock trading. Chinese property and building stocks are also rallying after PBOC Governor Gongsheng pledged increased funding support for the private sector. However, Chinese superconductor stocks experienced a decline following the dispelling of rumors about a breakthrough in technology.
The Japanese Nikkei Stock Index has rebounded from a three-week low, with Japanese brokerage stocks performing well after the five largest firms reported better-than-expected Q1 income estimates. Warren Buffet’s Berkshire Hathaway raised its stake in these brokerages, and several of them have stated potential additional shareholder returns depending on future earnings. Exporter stocks are also on the rise, benefiting from a retreat in the 10-year JGB bond yield from a nine-year high, which has pressured the yen. The Bank of Japan announced an unscheduled debt-purchase operation to lower bond yields, further supporting exporter stocks.
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