Wall Street finished in a sea of red amid a broad-based selloff as Fitch’s warning of a potential downgrade on the US big banks weighed on sentiment, following Chinese stock market woes on Tuesday. Three benchmark indices were all down more than 1%, while the CBOE Volatility Index jumped 11% to 16.46, suggesting the selloff was driven by risk-aversion trades. The US 10-year bond yield climbed for the fifth straight trading day to 4.22%, the highest since November 2022. Jumping bond yields tend to continue weighing on equities and strengthening the USD.
On the economic front, the US retail sales for July were surprisingly strong, up 0.7% month on month, and pointing to a 3% GDP growth in the third quarter. The data increased the odds for the Fed to keep rates at high levels for longer and offered strength to the greenback, pressing on riskier currencies, typically the Australian dollar and the New Zealand dollar.
In Asia, China’s disappointing economic data added to pessimism towards the country’s economic outlook after missing payments from the Chinese investment fund managers. Despite unexpected rate cuts by the PBOC on Tuesday, Chinese equities extended losses, and the Chinese Yuan weakened to the lowest since November 2022. In today’s agenda, the Reserve Bank of New Zealand is set to decide on the Official Cash Rate, and markets expect the bank to hold following a crash in the global dairy auction price.
Futures point to a lower open across the APAC region. The Nikkei 225 futures were down 0.89%, the ASX 200 futures slid 0.91%, and the Hang Seng Index futures fell 1.33%.
Price movers:
- All 11 sectors finished lower in the S&P 500, with Energy and Financials leading losses, down 2.44% and 1.8%, respectively. The tech rally was short-lived as all growth sectors, including Technology, Communication Services, and Consumer Discretionary, resumed losses. Nvidia was the only mega-cap that ended in the green, up 0.41%.
- Vietnamese EV maker VinFast’s shares soared 255% on its debut in New York, winning a market value of above US$85 billion, exceeding Ford and GM. The company launched an IPO on the Nasdaq Global Select Market under the symbol VFS.
- The British Pound popped amid a two-decade-high wage growth in the UK. The country’s yearly wage increase printed at 7.8% in July, the highest since 2001. GBP/USD jumped to 1.2753 at the intraday high before paring gains and finished 0.16% higher against the USD.
- WTI futures fell on China fears following a slew of disappointing economic data. WTI price fell off the ascending channel since late June, approaching an imminent support of 80.
ASX and NZX announcements/news:
- Fletcher Building (ASX/NZX: FBU) reported FY23 results. The revenue was NZ$8.469 billion, down 0.34% from a year ago. Net profit slid 45.6% to NZ$235 million. The fully imputed final dividend is NZ 16 cents per share, bringing the full-year payout to NZ 34 cents per share.
- Transurban (ASX: TCL) reported A$4.157 billion in revenue for FY23, up 24.9% from a year ago. Profit was A$92 million, compared with $A16 million in FY22. The dividend is AUD 58 cents per share for FY23 and the expected dividend for FY23 is AUD 62 cents per share, up 7% from FY23.
Today’s agenda:
- RBNZ Rate Decision
- UK CPI for July
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