EU stocks are mixed, US Treasury absorbing debt smoothly
U.S. Market flat as investors await Nvidia’s earnings, while Treasury yields and debt sales show strong demand. Crypto market down.
United States Stock Market and Corporate Earnings
The U.S. stock market remains relatively flat as investors await Nvidia’s earnings report, which has had a significant impact on market movements. Nvidia, valued at $3.1 trillion, is expected to experience a stock price movement of around 10%, equivalent to a $300 billion swing. This anticipation has kept major indexes like the S&P 500 and Nasdaq steady. Nvidia’s revenue for the quarter is expected to surpass $28.74 billion, more than double the previous year’s figure.
The Treasury Market
U.S. Treasury market is absorbing significant debt issuance smoothly. A $69 billion auction of two-year notes saw stronger-than-expected demand, with yields at 3.86%, nearing a 15-month low. Additionally, a $70 billion sale of five-year notes is scheduled, contributing to a total of over $500 billion in bills and coupons available this week. The U.S. is frontloading debt in shorter maturities to capitalize on potential benefits as interest rates are expected to drop. The yield curve between two-year and ten-year notes has narrowed to just three basis points.
Economic Indicators
Consumer confidence in the U.S. hit a six-month high in August, but concerns about the labor market persist, which aligns with the Federal Reserve’s focus on controlling labor market conditions. The overall economic sentiment supports expectations of a substantial interest rate cut by the Fed, with predictions of up to 104 basis points in reductions by the end of the year.
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Europe Stock Market Performance
European stocks exhibited mixed performance. France’s CAC 40 rose by 0.6%, and Germany’s DAX increased by 0.9%, while the UK’s FTSE 100 fell by 0.1%. The euro weakened, dropping by 0.6% to $1.1115, following soft lending data from the Eurozone and expectations of further rate cuts by the European Central Bank.
Economic and Political Developments In the UK
Prime Minister Keir Starmer warned of an upcoming “painful” budget. Sterling has been relatively strong, partly due to expectations that the new government will seek to improve relations with the European Union and amend post-Brexit agreements to alleviate economic strain.
Japanese Stock Market and Corporate News
Japan’s Nikkei 225 saw a slight gain of 0.2%, closing at 38,371.76. Toyota’s stock surged by 3.9% after reports of a potential collaboration with BMW on fuel cell technology. This partnership is part of Toyota’s ongoing efforts to innovate in the electric vehicle space, despite criticism that it has lagged behind in the global EV market.
Oil and Gold
Oil prices declined despite ongoing supply concerns from the Middle East and Libya. U.S. crude oil dropped by 1% to $74.81 per barrel, and Brent crude fell by 1.6% to $77.43 per barrel. Gold also saw a decrease of 0.9%, settling at $2,502.26 per ounce.
Cryptocurrencies
Bitcoin and Ether experienced significant declines, with Bitcoin dropping 3.1% to $59,941.38 and Ether falling 2.3% to $2,521.38. These movements reflect broader volatility in the cryptocurrency market.
Bond Yields
In the U.S., the 10-year Treasury yield rose by two basis points to 3.84%. In contrast, Germany’s 10-year yield decreased by two basis points to 2.26%, and the UK’s 10-year yield slightly increased to 4.01%.
The Currency Market
The U.S. dollar strengthened, with the Bloomberg Dollar Spot Index rising by 0.3%. The British pound and the euro both fell against the dollar, with the pound down by 0.5% to $1.3195 and the euro dropping by 0.6% to $1.1115.
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