According to the news report by Bloomberg, thanks to the sanctions imposed by the US on Russia, the stock market this week stumbled after four days of gains. Thanks to these sanctions, the S&P 500 ended lower in the last few minutes of trading yesterday, ending what would have been the index’s longest streak of gains since February this year. In fact, the S&P 500 is just 0.5% less than its all-time high.
Equities were also volatile yesterday, swinging between gains and losses throughout the trading day, while volumes also remained lighter than normal. However, it was the energy sector that led the declines after the price of crude oil dropped by 4%.
Today, markets opened lower after the US and China announced their dates for a fresh round of tariffs on billions of dollars’ worth of goods.
US Treasuries rose after investors swept in a record breaking $26 billion from the 10-year auction, proving that the increase in the American government issuance has not yet put pressure on the country’s long-term borrowing expenses.
The Russian Ruble dropped after the news of the new sanction broke. The Canadian Dollar gained in value and the country’s stocks went up even higher, despite Saudi Arabia’s threat to sell Canada’s assets thanks to a diplomatic dispute between the two countries.
In the last five weeks, stocks in the US have been gaining on the back of corporate earnings results as well as signs that economic growth was also increasing. These two factors have helped offset the increasing tensions being caused by the escalating trade war between the US and China. However, investors are still concerned that this trade war could actually hurt economic growth for the US.
Some of the key events this week are:
- Samsung reveals its new Galaxy smartphone, the Galaxy Note 9.
- On Friday, the consumer data will be released. Analysts are predicting that US consumer prices will probably show an increase from June to July, which will be consistent with the increase in inflation that is expected to keep the Feds focused on gradual increases in interest rates.
In the stock market:
- The S&P 500 is within 1% of its all-time high
- The Nasdaq 100 gained 0.1%
- The Dow Jones Industrial Average dropped by 0.2%
- The S&P/TSX Index gained 0.2%
- The STOXX Europe 600 Index dropped by 0.2%
- The MSCI All-Country World Index traded flat
Here is a quick look at the currency market:
- The Bloomberg’s Dollar Spot Index dropped by 0.1%
- The Japanese Yen gained 0.1% to trade at ¥110.98 to the US Dollar
- The Euro went up by 0.1% to trade at $1.1614
- The Canadian Dollar went up by 0.3%
In the bonds market, the yield on the 10-year US Treasuries dropped by 1 basis point to 2.96%.
In the commodities market,
- The Bloomberg Commodity Index fell by 0.4%
- Gold Futures were trading higher by 0.2% to a price of $1,220.90 to the ounce.
- The US crude oil benchmark, the West Texas Intermediate dropped by 3.4% to trade at $66.84 per barrel.
MarketWatch reports that Raymond James analyst Andrew Adams stated in a note to clients that 97% of corporate growth came in from sales and higher profit margins, and only 3% of EPS (earnings per share) growth was due to share buybacks. Adams believes that the stock market truly earned its gains in the second quarter of this year.
However, despite the great corporate performances, investors continue to remain rather skittish about pushing the stock market higher due to the earnings period closing down and trade tensions increasing.