Moving markets today: Asian shares rise with Wall Street, gold prices up; Focus on US Fed’s Powell testimony and US Treasury auctions
The S&P 500 extended its winning streak to its longest in over five months, reaching another record high despite a relatively subdued day of trading on Wall Street. Asian markets mirrored these gains on Tuesday, optimistic that US Federal Reserve Chair Jerome Powell would signal potential easing measures later in the day, while the dollar remained stable near its lowest levels in four weeks. Oil prices showed minimal change early in the day following a less damaging impact than expected from a hurricane in Texas, a crucial hub for US oil production. Gold prices edged upward as investors awaited Powell’s testimony and June inflation data to assess future moves by the Federal Reserve. In the UK, cooler June weather contributed to a reduction in consumer spending, while a Chinese property developer faced legal challenges with a winding-up petition. Key events for the week include updates on UK GDP, Wall Street earnings releases, Powell’s testimony, the consumer price index report, and the Reserve Bank of New Zealand’s meeting on Wednesday. The FTSE 100 closed lower on Monday, and futures indicated a quiet start to Tuesday’s trading session.
Here are five key takeaways for your day.
UK consumer spending dips in response to cool June weather
In June, British consumer spending saw a decline, impacted by unfavourable weather conditions, as indicated by recent surveys released on Tuesday. This adds to the broader picture of modest economic growth that the new Labour government aims to improve.
Barclays reported a 0.6 per cent year-on-year decrease in spending using its credit and debit cards for June, marking the first downturn since February 2021. The cooler weather at the beginning of the month was cited as a contributing factor.
Barclays also noted a decline in supermarket spending, a first in two years, but highlighted some optimistic aspects amidst these trends.
Chinese property developer faces winding-up petition in Hong Kong
Guangzhou R&F Properties is now facing legal action in Hong Kong after a creditor filed a winding-up petition against the company.
The petition, submitted by Seatown Private Credit Master Fund, stems from an unpaid loan totalling $614 million in principal and interest, as detailed in a company exchange filing on Tuesday.
Australian consumers pessimistic over rates, await impact of tax relief
Australian consumer sentiment dropped in July as worries about rising borrowing costs overshadowed the potential benefits of lower taxes and government assistance on power bills, a survey revealed on Tuesday.
The Westpac-Melbourne Institute index showed a 1.1 per cent decline in consumer sentiment for July, following a 1.7 per cent increase in June. With an index score of 82.7, it was clear that pessimism was widespread.
The survey also found that nearly 60 per cent of respondents expect mortgage rates to rise in the next 12 months, up from 48.3 per cent in June.
What to watch this week
This week’s economic calendar is relatively quiet, with the main highlight being the monthly update on UK GDP.
However, corporate news will be active as Wall Street gears up for the start of earnings season, beginning with reports from Citigroup, JP Morgan, and Wells Fargo later in the week.
Federal Reserve Chair Jerome Powell is set to testify before Congress on Tuesday, a significant event for market watchers. On Thursday, attention will turn to the release of the monthly consumer price index, providing crucial insights into inflation trends.
Additionally, the Reserve Bank of New Zealand is expected to keep its policy rate steady at 5.50 per cent during its meeting on Wednesday, July 10th.
Asian shares mirror Wall Street’s record highs
On Wall Street, the Dow Jones Industrial Average dropped by 0.08 per cent to 39,344.79. The S&P 500 went up 0.10 per cent to 5,572.85, and the Nasdaq Composite gained 0.28 per cent to reach 18,403.74. This marked the fourth consecutive record close for the S&P 500 and the fifth for the tech-heavy Nasdaq.
S&P 500 futures climbed 0.2 per cent, and Nasdaq futures increased 0.3 per cent following Wall Street’s record-setting gains overnight.
In Europe, EURO STOXX 50 futures were flat, while the FTSE 100 closed 0.1 per cent lower on Monday; its futures indicated muted trading on Tuesday, rising 0.04 per cent to 8,227.0 points.
In Asia, China’s CSI300 inched up 0.1 per cent, Hong Kong’s Hang Seng index was flat, and Japan’s Nikkei 225 jumped 1 per cent to a new record high.
In the foreign exchange markets, the US dollar held steady near four-week lows at 104.98 against a basket of currencies, providing some relief to the yen and yuan.
The Japanese yen stood at 160.84 per dollar, slightly up from last week’s 38-year low of 161.96, while the offshore Chinese yuan was at 7.2874 per dollar after four consecutive sessions of gains.
In commodities, gold rose 0.2 per cent to $2,363.31 an ounce following a 1.4 per cent drop overnight.
Oil prices remained largely unchanged as a hurricane hitting a key oil-producing area in Texas caused less damage than expected.