2 Aug 2022

The three major U.S. stock indexes closed down in shock last night. As of the close, the Dow fell 0.14%, the Nasdaq fell 0.18%, and the S&P fell 0.3%. The yield on the 10-year U.S. Treasury bond fell 2% to close at 2.588%, a difference of about -30 basis points compared with the yield on the two-year Treasury bond. The fear index VIX closed up 7.08%. Brent crude closed down 3.48%. Spot gold closed up 0.34% at $1,772.12 an ounce. The dollar index remained high, closing at 105.39.

The three major stock indexes opened slightly lower. The US July ISM manufacturing PMI recorded 52.8, slightly exceeding the expected 52, and the previous value of 53. Institutional analysis said that the ISM manufacturing industry performed well for the 26th consecutive month. There are signs that the rate of new orders has fallen amid growing concerns about excess inventories and continued record delivery times. Despite uncertainty about the rate of new orders, employment activity remains strong.

On the energy front, Freeport LNG said the time to resume initial operations at its Texas LNG facility remains October 2022. Germany's first restarted coal power plant, which has been on standby since early December 2021, is about to be connected to the grid. With a net output of 690 megawatts, the power plant could theoretically power more than 500,000 homes. In addition, Moody's expects real GDP in the euro area to grow by 2.2% in 2022 and 0.9% in 2023, both lower than the 2.5% and 2.3% predicted in May; the real GDP growth rate in the United States is expected to be 2.1% this year, and 2023 1.3% a year.

US stocks closed slightly lower, the Dow closed down about 50 points, and the Nasdaq closed down about 0.2%. The U.S. Treasury raised its quarterly borrowing forecast to $444 billion, up about $262 billion from the original estimate of $182 billion, and left its September-end cash balance forecast unchanged at $650 billion. The change reflects the fact that the Treasury Department did not assume in May that the Fed would reduce its Treasury holdings. The Fed's balance sheet reduction began in June, before it was officially announced. Another reason for the sharp increase in borrowing estimates is a change in forecasts for federal government revenue, Treasury officials said. Budget revenue hit a record last quarter, but officials said the latest signs point to lower revenue and higher spending.

Market focus is on the second-quarter reports of more than 20% of the S&P 500 this week, as well as the July nonfarm payrolls data released on Friday. The former will affect market risk appetite, while the latter will be related to the rate hike by the Fed in September.

Apple fell 0.62%. Apple will issue bonds worth $5.5 billion in four parts to raise funds for stock buybacks and dividends.

Microsoft fell 0.97%, with more users abandoning Chrome, and Microsoft's Edge browser becoming more and more popular.

Amazon rose 0.33 percent as it added same-day delivery to more than a dozen U.S. retail stores.

Tesla rose 0.04%, Musk submitted a sealed defense and countersued Twitter; MLIV investigation: Musk may continue to sell Tesla, and may even lose the richest man position next year.

Meta rose 0.52% after Meta reiterated its warning that it could pull Facebook and Instagram from the European Union.

​Sources from: Investing.com; Reuters.com
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Louis Yap

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