After another good day in the stock market, the value of future stocks went down a bit on Wednesday. This is part of the current trend of stocks improving towards the end of the month, as investors try to make up for the money they lost in August.
On Tuesday evening, stock futures just changed following yet another positive trading session, which indicates the most recent progress in a late-month Increase as investors work to balance out the losses experienced in August.
Futures linked to the Dow Jones Industrial Average saw a slight increase of 6 points, equivalent to 0.01%. Similarly, S&P 500 futures and Nasdaq 100 futures also had marginal gains of less than 0.1%.
These shifts come after Wall Street enjoyed its third successive session of gains, allowing investors to regain some of the ground lost as the month approaches its end. Notably, the tech-focused Nasdaq Composite outperformed, achieving a 1.7% increase in the session. The broader S&P 500 index also performed well, rising by approximately 1.5%, marking its strongest performance since June. The Dow Jones Industrial Average managed to climb by nearly 0.9%, resulting in a gain of more than 290 points.
Tuesday’s successes correspond with data pointing towards a potential economic slowdown. The Conference Board’s consumer sentiment index, registering at 106.1, fell short of the economist consensus of 116 projected by Dow Jones polls. Furthermore, data from the U.S. Bureau of Labor Statistics indicated a decrease in available job listings during July.
At the same time, the 2-year Treasury yield declined on Tuesday. This drop in economic activity suggests the possibility of the Federal Reserve adopting a more accommodating policy stance, which instills optimism among investors.
August Index Trends and Upcoming Data Await Investors
Tuesday’s market movements align with the concept of a “silver lining in bad news” environment, which tends to emerge when concerns about interest rates and Federal Reserve policies are prevalent. Sonu Varghese, a global macro strategist at Carson Group, pointed out, “Any weaknesses in economic data lead to reduced upward pressure on yields, consequently benefiting the equity market.”
Despite the upward trend, the three main indices are still on track to experience losses in August, with only two trading days remaining. The Nasdaq Combination is expected to finish August with a 2.8% decline, while both the Dow and S&P 500 are predicted to encounter drops of around 2%.
During Wednesday’s trading session, investors will focus on ADP’s job data, marking the start of a series of labor-related statistics scheduled for release throughout the week. Later, jobless claims figures will be disclosed on Thursday, followed by information concerning nonfarm payrolls, wage data, and the unemployment rate on Friday.
Additionally, market participants will keep a close watch on GDP figures and pending home sales data set to be released on Wednesday morning. In terms of corporate updates, Brown-Forman, the company behind Jack Daniel’s whiskey, is expected to reveal its quarterly earnings before the market opens. Furthermore, following the conclusion of the trading day, technology firms such as Salesforce, CrowdStrike, and Okta are scheduled to announce their financial results.
Investors Are Processing Economic Data, Leading to a Rise in Treasury Yields
On Wednesday, U.S. Treasury yields increased, recovering from some of the losses seen on Tuesday. This rise occurred as investors assessed the economic landscape after the latest data releases. Notably, the consumer confidence index, which registered at a much lower-than-expected level of 106.1 on Tuesday, contributed to this evaluation.
As of 4:23 am ET, the 10-year Treasury yield had gone up slightly over one basis point, reaching 4.1374%. This recovery followed a drop of as much as 10 basis points the previous day. Similarly, the 2-year Treasury yield was trading at 4.9129%, showing an increase of over two basis points. In contrast, it had decreased by as many as 16 basis points on Tuesday.
It’s important to note that yields and prices move in opposite directions, and a single basis point corresponds to a 0.01% change.
European Stock Markets
On Wednesday, European stock markets started the day with upward momentum, reflecting the trends observed on Wall Street during the previous session.
The comprehensive Stoxx 600 index of European stocks exhibited a 0.2% increase, with most sectors participating in cautiously optimistic trading. Leading the gains were mining stocks, which experienced a significant increase of 0.9%, followed by the insurance sector with a rise of 0.6%. However, utility stocks saw a decline of 0.4% during the early trading hours.
Country Garden Issues New Shares Worth HK$270 Million
Chinese real estate company Country Garden Holdings has unveiled a plan to issue fresh shares worth approximately 270 million Hong Kong dollars ($34.4 million) to repay a portion of its existing loans.
These new shares will be offered at a price of 77 Hong Kong cents per share, which is a 15.38% discount compared to the closing price of 91 cents on Tuesday.
The recipient of these shares is Ever Credit, an investment holding firm fully owned by Kingboard Holdings, a company specializing in laminates manufacturing. As a result, Kingboard will acquire a 1.25% ownership stake in Country Garden through its subsidiary Ever Credit.
Back in December 2021, Country Garden had entered into a term loan arrangement worth HK$1.88 billion with Ever Credit. This issuance of shares will help reduce its outstanding loan balance to Ever Credit to just under HK$1.6 billion.
Country Garden has clarified that this share issuance is intended to preserve its cash reserves, lower its financial leverage, and strengthen its overall financial position.
NIO’s Shares Drop 8.30%
NIO’s shares listed on the Hong Kong stock exchange experienced a significant drop of 8.30% on Wednesday, occurring shortly after the company revealed a net loss of 6.06 billion yuan ($831.65 million) for the second quarter.
This financial loss exceeded the 2.76 billion yuan net loss reported during the same period the previous year.
In the second quarter, the Chinese electric vehicle manufacturer managed to sell 23,520 vehicles, largely due to the clearance of its outgoing models through substantial discounts. Nonetheless, the introduction of an updated product lineup has already started to yield more positive outcomes, with 20,462 vehicles delivered in July alone.
Expectations suggest that NIO’s deliveries in the third quarter could experience a significant surge, possibly even doubling, as indicated by John Zeng, the director of China forecasting at Globaldata in a conversation with CNBC. Zeng commented, “Quarterly deliveries will more than double in Q3 and that will help them improve their total revenue.”
However, it’s important to note that despite the increased deliveries, the company might face challenges to its profitability in the coming quarters due to the implementation of price cuts, as highlighted by Zeng.
Australia’s Inflation Rate Eased to 4.9%
In July, Australia’s consumer price index registered a 4.9% year-on-year growth, marking a deceleration from June’s 5.4% and the third consecutive month of decreasing inflation. Excluding volatile elements such as fuel, fresh food, and holiday travel, the adjusted inflation rate was 5.8%, down from the revised 6.1% in June. The primary drivers of the July rise were housing costs and food, along with non-alcoholic beverages, as per Australia’s statistics bureau.
Recent Market Insights, Treasury Yields, European Stocks, Corporate Actions, and NIO’s Performance in Focus. Trends suggest August losses, upcoming data awaited. Treasury yields rebounded. European markets are positive. Country Garden’s share issuance aims at fiscal strength. NIO Company faces challenges despite delivery growth.