​2 Sep 2022

Last night, the three major U.S. stock indexes fluctuated higher. As of the close, the Dow rose 0.46%, the Nasdaq fell 0.26%, and the S&P rose 0.3%. The yield on the 10-year U.S. Treasury bond rose 1.846% to close at 3.255%, a difference of about -25 basis points compared with the yield on the two-year Treasury bond. The VIX, the fear index, fell 1.2%. Brent crude closed down 2.98%. Spot gold closed down 0.8% at $1,697.33 an ounce. The dollar index remained high, closing at 109.67.

The three major stock indexes collectively opened lower. The number of Americans filing for unemployment benefits in the week ended August 27 recorded 232,000, the third consecutive weekly decline and the lowest level since June 25, 2022. This suggests that despite slowing U.S. economic growth, job demand remains healthy.

The final reading of the U.S. Markit Manufacturing PMI for August was 51.5. U.S. factory output fell for a second straight month in August, and demand for goods has fallen for three straight months as soaring inflation, tight supply, rising interest rates and the lingering impact of an increasingly uncertain economic outlook. Excluding the pandemic lockdown period in the early months of the year, it was the worst recession in U.S. manufacturing since the 2009 global financial crisis.

Russian Deputy Prime Minister Novak said: The OPEC+ agreement needs to be extended beyond 2022; the oil price cap will destroy the crude oil market, and Russia will not supply oil and oil products to countries that support oil price restrictions; Russian oil producers are preparing to accept EU estimates Oil embargo to be implemented in December; 2022 outlook for Russian oil production at 520-525 million tons. Pipeline data show that the first batch of orders for Beixi-1 will resume delivery at 2 a.m. local time on Saturday.

U.S. manufacturing growth held steady at its slowest pace in more than two years in August, while a measure of material costs fell for a fifth straight month, a welcome sign that inflationary pressures are ebbing. The U.S. ISM Manufacturing PMI recorded 52.8 in August, unchanged from the lowest level since June 2020. A reading above 50 indicates an economic expansion, giving the Fed the green light to tighten monetary policy more aggressively. The Atlanta Fed’s GDPNow model forecast for U.S. third-quarter GDP growth rose to 2.6%, up from a previous estimate of 1.6%.

The agency pointed out that the highly anticipated U.S. non-farm payrolls report is likely to trigger the Fed's third large-scale interest rate hike. Forecasts show that nonfarm payrolls in the U.S. will record a solid, moderate increase in August, with an increase of 298,000, and the unemployment rate will remain steady at 3.5%. Wages are also expected to rise steadily amid a persistent mismatch between labor supply and demand. Combined with the previous record U.S. employment data in July, improved consumer confidence data and an unexpected rise in job vacancies, it may be enough to push the Fed to raise interest rates by 75 basis points for the third time. Conversely, any signs of a sharp slowdown in job growth, coupled with a sharper slowdown in average hourly earnings from the U.S. Labor Department, could help push market expectations for a 50-basis-point Fed rate hike. However, Fed members will need to make their views clear after the release of CPI data this month.

Apple rose 0.47%, Bank of America said that the pricing of the iPhone 14 series is the key, or boost Apple's profits.

Microsoft fell 0.41%, announcing the construction of a data center in Qatar, creating 36,000 new jobs; it may launch a new Surface Studio this fall.

Amazon rose 0.83%, launching AWD warehousing and distribution services to help sellers deal with supply chain problems.

Tesla, up 0.56%, has started deliveries of Model Y in Singapore made by the Shanghai Gigafactory.

Meta rose 1.49%, and plans to develop paid features on major platforms such as Facebook.

Nvidia fell 7.67% as the U.S. restricted Nvidia’s exports of high-end GPUs to China.

Micron rose 1.38% on plans to invest $15 billion to build a new cutting-edge memory manufacturing plant in Idaho.

Uber rose 0.56% as it plans to launch 10,000 more electric cars in London over the next few years in partnership with financial technology startup Moove.

Honda Motor fell 1.51%, total U.S. sales fell 37.7% in August, and U.S. auto sales fell 46.9%.

Sources from: Investing.com; Reuters.com

Louis Yap

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