Stocks fell on Monday as trading opened in August, with some investors questioning whether the recent rally has further to run following the best month since 2020.
This week, investors have more economic data and company earnings to digest. The July nonfarm payrolls report from the Bureau of Labor Statistics will give more insight into the labor market. Solid jobs growth has led economists to say the US is currently not in a recession, despite two consecutive quarters of negative GDP. Earnings are due from Caterpillar, PayPal and Starbucks
Of course in Australia today we have the RBA rate decision at 2.30pm.
Overnight all three major indexes snapped three-day winning streaks, with the S&P 500 slipped 0.28 per cent The Nasdaq Composite lost 0.18 per cent. The Dow Jones Industrial Average lost 0.14 per cent The 30-stock Dow slipped even though Boeing jumped 6.13 per cent after the US approved a plan to resume 787 deliveries.
A better-than-expected manufacturing report helped sentiment. Shares of chipmakers like AMD and Nvidia rebounded into positive territory and remained there. The report also showed that prices slipped, a positive development amid high inflation.
The energy sector was a big drag on the market as oil prices fell 4.8 per cent to US$93.89 a barrel as weak manufacturing data from China and Europe weighed on the demand outlook while investors braced for this week’s meeting of officials from OPEC and other top crude producers on supply. Shares of Diamondback Energy, ExxonMobil, Chevron and Devon Energy all traded down.
In currency news the $US Dollar index down 0.4 per cent with Yen strength the story in FX once again.
One Australian dollar has strengthened compared to the US dollar yesterday, buying 70.27 US cents (Mon: 69.90 US cents), 57.33 Pence Sterling, 92.49 Yen and 68.47 Euro cents.
In commodity news, gold neared a one-month high on Monday on the back of a decline in the US dollar, with investors awaiting economic data that could influence the path of Federal Reserve policy tightening.
Gold gained $5.90 or 0.3 per cent to US$1788 an ounce. Strategists argue gold has more room to the upside given “major issues with Russia, Ukraine and China” and as the $US dollar runs into some resistance. And further geopolitical uncertainty also in play with US House Speaker Pelosi expected to visit Taiwan this week - a trip that will test China’s appetite for confrontation.
Silver was up $0.17 or 0.8 per cent to US$20.36 an ounce.
Iron ore futures are pointing to a 1.1 per cent fall.
Copper was down 0.8 per cent to US$354.25 a pound, breaking six straight daily increases.
In nickel news it appears that the Indonesian government is the latest to impose a royalty tax or export tax as the government seeks to boost revenues from exports.
Bitcoin futures closed down 4.3 per cent.
On Monday, the SEC said it had charged 11 people for their roles in creating and promoting an allegedly fraudulent crypto pyramid and Ponzi scheme that raised more than $300 million from investors.
The scheme, called Forsage, claimed to be a decentralized smart contract platform, and it allowed millions of retail investors to enter into transactions via smart contracts that operated on the ethereum, tron and binance blockchains. But under the hood, the SEC alleges that for more than two years, the setup functioned like a standard pyramid scheme, in which investors earned profits by recruiting others into the operation.
The SPI futures are pointing to a 0.3 per cent fall
Figures around the globe
Across the Atlantic, European markets closed lower. Paris fell 0.2 per cent, Frankfurt lost 0.03 per cent and London’s FTSE closed 0.1 per cent lower.
Asian markets closed higher. Tokyo’s Nikkei added 0.7 per cent, Hong Kong’s Hang Seng rose 0.1 per cent and China’s Shanghai Composite closed 0.2 per cent higher.
Yesterday, the Australian sharemarket gained 0.7 per cent to 6,993.
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.