Wall Street records lift sentiment ahead of FOMC

Credit: REUTERS/TORU HANAI

The latest advances on Wall Street bode well for Asian risk markets this morning as global attention focuses on the FOMC outcome on Wednesday and July payrolls two days later.

SYDNEY, July 29 (IFR) - The latest advances on Wall Street bode well for Asian risk markets this morning as global attention focuses on the FOMC outcome on Wednesday and July payrolls two days later.

Buoyed by a Goldilocks US Q2 2019 GDP report and positive quarterly earnings from Alphabet, Intel, Starbucks and McDonald’s, the S&P 500 and Nasdaq Composite rallied 0.74% and 1.11% to scale new closing peaks last Friday, while the Dow Jones rose 0.17%.

US GDP grew at an annualised rate of 2.1% in Q2, confirming a slowdown from Q1’s 3.1% expansion, but beating the 1.8% consensus forecast. Core PCE rose an annualised 1.8% versus the 2.0% market expectation.

The data showed the US economy remained in decent shape, despite ongoing weakness in Europe and an apparently deepening slowdown in China where industrial profits fell 3.1% year-on-year in June, following a 1.1% increase in May, according to a report released on Saturday.

Treasuries ended little changed as expectations hardened on a 25bp rather than a 50bp Fed rate cut on Wednesday where attention will be on the accompanying FOMC statement and Fed Chairman Jerome Powell’s subsequent news conference.

US two-year, 10-year and 30-year yields all eased 1bp to 1.86%, 2.07% and 2.60%.

Eurozone shares recovered some of their post ECB meeting losses as encouraging company updates helped the DAX and CAC 40 gain 0.47% and 0.57%.

The FTSE Milan underperformed with a 0.30% decline on the latest fiscal infighting within Italy’s coalition government.

The FTSE 100 climbed 0.80%, headed by a 9.8% leap in Vodafone’s share price after announcing plans to move its mobile mast operations into a new company that could then be listed.

In the rates market Bund and Gilt 10-year yields each eased 1bp to minus 0.38% and 0.69%, while political noise helped push BTP 10-year yields 6bp higher to 1.57%.

European main and crossover CDS spreads widened 1.5bp and 4.5bp to 47.5bp and 243bp. The US investment-grade CDS spread rose 0.5bp to 51.5bp.

Primary markets

QIC Shopping Centre Fund, rated A– (S&P), is holding investor meetings in Asia and Australia this week, arranged by CBA and NAB, for a potential Australian dollar-denominated Green bond offering.

(Reporting by John Weavers; Editing by Vincent Baby)

((john.weavers@thomsonreuters.com; 612 9373 1655; Reuters Messaging: john.weavers.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More