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US stocks post monthly losses, with key job data eyed

Non-farm payroll

Wall Street finished mixed and posted a monthly loss as the month-end rebound lost steam ahead of the July US non-farm payroll data later today. The Nasdaq was slightly higher, while the Dow and the S&P 500 were in the red as growth stocks outperformed following the PCE data, printing at 3.3% year on year and was in line with expectations. However, the tech-heavy index snapped a four-month winning streak and posted the worst monthly performance in August amid a selloff in AI-related tech shares. Profit-taking and sector rebalancing may continue to weigh on the sector if the Fed stays on the hiking cycle.

The US bond yields eased climbing this week, which took pressure off the equity markets. The US dollar was mixed against the other major currencies as the Eurodollar weakened sharply following a mixed bag of economic data, which increased the odds for the ECB to pause its rate hiking cycle. At the same, the king dollar weakened broadly against Asian currencies, particularly in the USD/JPY, down 0.5% as the recent slump in Yen strengthened bets for another BOJ intervention.  

In commodities, gold pulled back slightly amid a strengthened USD, while crude oil prices jumped on expectations that the OPEC+ would continue output cuts to the end of 2023.

In Asia, China cut down payments and encouraged banks to lower mortgage rates, but markets did not buy into it. Futures point to a lower open across the APAC region, with the Nikkei 225 futures down 0.37%, the ASX 200 futures falling 0.50%, and the Hang Seng Index futures slipping 0.02%. 

Price movers:

  • 7 out of 11 sectors finished lower in the S&P 500, with Healthcare and Utilities, leading losses, down1.21% and 1.03%, respectively. The growth sectors, including Consumer Discretionary, Technology, and Communication Services, finished green. Energy stocks also finished in the green due to a jump in oil prices.
  • Lululemon’s shares rose 1.8% in after-hours trading on earnings beat. The athletic apparel retailer reported a year-on-year 18% jump in both revenue and profit and raised the full-year guidance to between US$9.51 billion and US$9.57 billion for FY23. The Q2 EPS was US$2.68, beating an estimated US$2.54, and revenue was US$2.21 billion, topping the expected US$2.17 billion.
  • UBS’s shares jumped 6% to the highest level since 2008 as Switzerland’s biggest bank beat earnings expectations in the second quarter. It is the first earnings after the bank took over its rival, Credit Suisse. The bank also announced a plan to lay off thousands of staff. The second-quarter profit came to US$28.88 billion, well above an estimated US$12.8 billion.
  • WTI futures jumped more than 2% to nearly a one-month high on supply concerns. Expectations for OPEC + to further cut outputs and improved demand outlooks continue to lift crude prices.

ASX and NZX announcements/news:

  • No major announcement.

Today’s agenda:

  • Japan final Manufacturing PMI for August
  • China Caixin Manufacturing PMI for August
  • US Non-Farm Payroll for August
  • US ISM Manufacturing PMI

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