Treasury yields hold steady ahead of key jobs report
U.S. Treasury yields remained stable on Friday as investors eagerly awaited the release of important labor market data. This data is expected to provide valuable insights into the state of the economy and potentially influence the Federal Reserve’s future policy decisions.
At 4:08 a.m. ET, the yield on the 10-year Treasury was slightly down by less than one basis point, standing at 4.1797%. The yield has been hovering around levels not seen since November 2022, which it had reached earlier in the week. Meanwhile, the 2-year Treasury saw an increase of over one basis point, reaching 4.9127%.
European markets open slightly higher
European markets opened on a positive note to close off what was a generally downbeat week. Investors were focusing on the Bank of England’s rate hike on Thursday and company earnings reports. In the first few minutes of trading, the pan-European Stoxx 600 index was up 0.2%. Different sectors showed mixed performances, with banking stocks leading minor gains by rising 0.6%, while media stocks experienced a 0.4% drop.
China lifts tariffs on Australian barley imports after 3 years, Canberra eyes wine next
China announced on Friday its decision to lift tariffs on Australian barley imports starting August 5. This move indicates improving bilateral relations and is expected to alleviate supply concerns after Russia suspended a humanitarian corridor for key Ukrainian grains. The Chinese Ministry of Commerce stated that the changes in the Chinese barley market necessitated the removal of anti-dumping duties and countervailing duties on Australian barley. However, the ministry did not provide further details on these changes. Australian trade, foreign, and agriculture ministers welcomed this outcome and anticipate a similar process for the removal of duties on Australian wine.
Australia central bank cuts growth outlook for 2023
The Reserve Bank of Australia (RBA) has decreased its growth outlook for the country for 2023. It now forecasts a growth rate of 1%, down from the previous estimate of 1.25%. The RBA’s quarterly monetary policy statement attributes subdued economic activity to cost-of-living pressures and the impact of rising interest rates on domestic demand. However, the RBA notes that inflation is moving in the right direction and has adjusted its inflation rate forecasts to 4.25% from 4.5%. The bank expects inflation to decrease further, reaching 3.75% by the end of 2024 and returning to the 2-3% target range in late 2025.
Hang Seng leads gains in Asia as property stocks surge
Hong Kong’s Hang Seng Index experienced significant gains on Friday, primarily driven by property and basic materials stocks. The index rose by 1.61%, with property stocks such as Longfor Group, Country Garden Holdings, and China Resources Land leading the gains.
Small-cap benchmark is still shy of a 52-week high
The Russell 2000, a small-cap index, has seen significant gains throughout the summer but has yet to surpass its 52-week high. Despite outperforming the S&P 500 and the Dow Jones Industrial Average over the past three months with a 12.7% increase, the Russell 2000 remains 3.5% below its peak level of 2,030.05 reached in August 2022.
Individual investor bullishness jumps again in latest AAII survey
According to the American Association of Individual Investors (AAII) survey, bullishness among individual investors regarding stock price increases over the next six months has surged to 49.0%, up from 44.9% the previous week. This marks the ninth consecutive week in which bullishness has remained above the historic average of 37.5%. Contrarians may view this as an indication to bet against the market, as rising bullishness often indicates increased risk and suggests that much of the desired buying has already occurred. Bearish sentiment among retail investors fell to 21.3%, while neutral sentiment decreased to 29.7%.
Stocks poised for losing week
With only one trading session left in the week, the major indexes, including the Nasdaq Composite, S&P 500, and Dow, are on track to experience losses. The Nasdaq Composite and S&P 500 have both declined by 2.5% and 1.8% respectively since the week began, marking their worst weekly performance since March. The Dow has experienced a 0.7% slide on a week-to-date basis.
Berkshire Class A shares hit a new record high
Warren Buffett’s Berkshire Hathaway achieved a new record high on Thursday, with Class A shares closing at $541,000. This exceeds the conglomerate’s previous record of $539,180 reached on March 22, 2022. Berkshire Hathaway is set to report its second-quarter earnings on Saturday and has already gained over 15% this year.
Stock futures are little changed
As of 6 p.m. ET, stock futures show little movement. Futures tied to the Dow, S&P 500, and Nasdaq 100 are all nearly flat, within 0.1% of their current levels.
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