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- US stocks close higher boosted by stimulus measures from Beijing
US stocks close higher boosted by stimulus measures from Beijing
🐮🐻 #56: PLUS a question for the reader about ESG
Good morning. If you’re based in the UK, we hope you had a good bank holiday; if not — hope you had a good Monday!
Just a quick note to say that Bull & Bear are going on vacation and will be back in a couple of weeks. Don’t miss us too much.
While you’re here, we’d appreciate your insights on the future of this newsletter. A number of you said that you would be interested in more ESG content.
Here’s the pitch:
A weekly (or bi-weekly) email that covers one publicly traded company making the world a better place.
It could be a renewable energy, education, socially orientated stock or anything in between.
The purpose would be to shed light on sustainable investment opportunities for retail investors.
🐮 ~ 🐻
📰 What’s moving Markets?
Stocks:
US Stocks Last Week: The S&P 500 increased by 0.7% in Friday’s session and 0.8% for the week. The Nasdaq Composite went up by 0.9% and gained 2.3% over the week, ending a three-week loss streak for both indices.
European Stocks: Stoxx Europe 600 index experienced a slight dip due to strong commodity prices impacting energy and utility stocks.
Asian Stocks: Hang Seng index dropped by 1.4%, China's CSI 300 decreased by 0.4%, and Japan’s Topix went down by 0.9%.
On Monday, boosted by stimulus measures from Beijing, US and European stocks rose. Notably, Wall Street’s S&P 500 rose 0.6% and the Nasdaq Composite increased 0.7%.
Bonds:
US government bonds saw a sell-off, leading yields on long-term debt to a 16-year high earlier in the week.
The two-year US Treasury yield rose by 0.06 percentage points to 5.07%, while the 10-year note remained stable at 4.23%.
FX:
The US dollar appreciated by 0.2% against other major currencies after Powell’s comments, reaching its highest since May 31. On Monday, the dollar dropped by 0.1% against a basket of six other currencies.
The Federal Reserve has signaled potential interest rate hikes to counteract persistent inflation, impacting currency markets.
Commodities:
Brent crude oil increased by 1.3% to $84.48 a barrel. The US's West Texas Intermediate rose by 1%, settling at $79.83 a barrel. Despite this, oil prices were on track for a second consecutive week of declines due to concerns over China's economic future and rising interest rates.
Context:
Federal Reserve Chair Jay Powell emphasized the need to address high inflation, suggesting a potential interest rate rise or maintaining the current rates to achieve the 2% inflation target.
Recent economic data indicates a robust labor market and sustained consumer spending, despite expectations that the Federal Reserve would cease raising its benchmark rate, which is currently between 5.25-5.5%.
Beijing's recent move to cut levies on share trading, a first since the 2008 financial crisis, reflects efforts to stimulate China's economy, which has been hampered by prolonged pandemic restrictions.
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