US Stocks Rallied for the Second Day

　　

The US stocks rallied for the second day in a row, as investors digested weak data on New York manufacturing and the Chinese economy. The market is coming off a fourth straight weekly gain, the longest run this year, with sentiment buoyed by signs of slowing inflation pressures that stirred hopes of a shift by the Fed to less hawkish rate hikes and a gradual slowdown in the economy. Still, the rally has left market breadth looking stretched with stocks vulnerable to a pullback. Meanwhile, data showed China’s July retail sales, investment and industrial output missed economists’ estimates, and in the Eurozone, the risk of recession has reached the highest level since November 2020.

The benchmarks, S&P500 and Dow Jones Industrial Average both advanced on Monday. The S&P500 closed near the highs of the day, reversing losses of as much as 0.5%, with nine out of eleven sectors staying in the positive territory. Moreover, the Consumer Staples sectors got the best performance among all groups, rising with a 1.05% gain on daily basis, while Energy slid with 1.98% losses for the day, performing the worst. The Dow Jones Industrial Average rose 0.4%, Nasdaq 100 increased 0.7% as big tech-led gains, and the MSCI world index moved up 0.2%.

Main Pairs Movement

US dollar edged higher on Monday, benefiting its haven status, while the Chinese yuan dipped after a batch of disappointing data prompted the country’s central bank to cut interest rates. The DXY index surged unstoppably and closed near a daily high above 106.4 for the day.

The GBP/USD slid for the day, as market mood amid undermining risk sentiment and provided a boost to the safe-haven greenback. The cables witnessed heavy selling pressure at the beginning of this week and closed near a daily-low level of 1.205. Meanwhile, EUR/USD was also under bearish momentum and dropped to a level below 1.016. It’s worth noting that investors prefer to pile onto the greenback ahead of Wednesday’s FOMC minute showdown, which may reveal some clues to the next move by Fed officials.

Gold dropped by 1.26% on a daily basis on Monday, as China data triggers risk-aversion and investors resort to selling everything amid a pessimistic market mood. XAU/USD was driven by bearish momentum almost all the day and fell from $1802 to $1780 marks. Moreover, WTI and BRENT oil declined with 2.91% and 4.53% losses on a daily basis respectively.

Economic Data

Currency	Data	Time (GMT + 8)	Forecast
AUD	RBA Meeting Minutes	09:30
GBP	Average Earnings Index +Bonus (Jun)	14:00	4.5%
GBP	Claimant Count Change (Jul)	14:00	-32.0K
EUR	German ZEW Economic Sentiment (Aug)	17:00	-53.8
USD	Building Permits (Jul)	20:30	1.650M
CAD	Core CPI (MoM) (Jul)	20:30