As the latest corporate earnings season is set to begin at the end of the week with major banks like Wells Fargo, Citigroup and JP Morgan Chase US equities rallied from the sessions lows on Monday to finish mixed. The Dow Jones Industrial Average finished higher by 0.15% as gains in Walgreens Boots Alliance shares +2.3% and Walmart shares +1.5% helped the index finish in positive territory. The S&P 500 closed flat down 0.04% as the Consumer Staples +1.34% and Real Estate +1.32% sectors were the leaders of the day. Lagging behind were technology stocks as the S&P 500 sector was the worst performer down 1.18% led by declines in the bigger players on the market – Google -1.02%, Amazon -1.33% and Microsoft -1.14%. As such the tech heavy Nasdaq finished the session down 0.67% with some notable decliners including Adobe -3.24%, Salesforce.com -4.16% and Global Payments Inc -3.23%
Capping gains in the market were fears of the sharp rise in interest rates, given the array of positive economic data released last week. Adding fuel to the fire, the man who coordinates with fellow Fed members and decides upon the cash rate, the Federal Reserve Chairman Jerome Powell last week commented that monetary policy is “a long way” from neutral signalling more rate hikes may be coming. The news was to the delight of treasury yields as they climbed to multi year highs as the yield on the US 10-year notes touched 3.2460%.
However it isn’t just US stocks that have had cracks showing, European markets fell broadly on Tuesday as the European Union reiterated concern regarding Italy’s budget plan. Focus shifted to the currency markets where the euro slid to a seven week low against the US dollar of $1.1460. Moving into the Asian region where shares also dipped following to release of macroeconomic news where the People’s Bank of China (PBOC) announced it would cut the bank’s reserve requirement ratio by 100 basis points in an effort to support the domestic economy following the recent trade spat with the US. The Chinese yuan closed at its lowest level in seven weeks against the US dollar with the USDCNY last trading at 6.9307.
- US inflation data to be released on Thursday 11th October at 11.30pm (AEDT)
Chart of the Day: Salesforce.com Inc (CRM) Daily Chart