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Sudden Pullback in Tech Shares, US Stocks Move Higher


US stocks advanced on Tuesday, and closed higher following a sudden pullback in tech shares, as investors assessed the latest round of upbeat earnings against a backdrop of growing concerns over slowing growth and rising borrowing costs. Moreover, reports Monday indicating a sharp drop in New York state manufacturing along with the longest streak of declines since 2007 in homebuilder sentiment sparked optimism in equity markets that the Fed may slow interest rates hike. A critical clue on how sensitive the Fed is to unfolding economic data may be known when the minutes of the last meeting of the Federal Open Market Committee on Wednesday.

The benchmarks, S&P 500 and Dow Jones Industrial Average both edged higher on Tuesday. Six out of eleven sectors stayed in the positive territory, as Consumer Staples and Consumer Discretion performed best among all groups, rising with 1.21% and 1.09% gains on daily basis. The Dow Jones Industrial Average kept its leadership role within major benchmarks, rallying 0.7% for the day. The Nasdaq 100 ended lower, sliding 0.2%, and the MSCI World index was little changed on Tuesday.

Main Pairs Movement

The US dollar was little changed down on Tuesday, as investors waited on the US retail sales and minutes from the Federal Reserve’s July meeting on Wednesday. The DXY index witnessed fresh transactions and edged higher as recession fears boost the safe-haven greenback during the UK trading session. However, after touching a daily level above 106.9, DXY lost bullish momentum and pullback to oscillate in a range from 106.3 to 106.6 level.

The GBP/USD advanced with a 0.34% gain on a daily basis for the day, as UK employment figures were better-than-expected, further cementing the case for a 50 bps BOE rate hike. The cables suffered heavy selling pressure during the UK trading session as US dollars strengthen across the board. Then, GBP/USD rebounded and touched a daily high level above 1.211 during the early US trading session. Meanwhile, EUR/USD reached a daily high level above 1.019 in the period of the early US trading session. The pairs rose 0.11% on Tuesday.

Gold slid with a 0.23% loss on a daily basis for the day, holding lower ground near one week after a two-day downtrend. Investors were cautious as fears of the economic slowdown in China and Europe and waited for a clue on Fed’s decision to interest rates hike shown when FOMC meeting happens on Wednesday. Meantime, WTI and Brent oil dropped on Tuesday, falling 2.90% and 3.22% respectively.

Economic Data

CurrencyDataTime (GMT + 8)Forecast
NZDRBNZ Interest Rate Decision10:003.00%
NZDRBNZ Press Conference11:00 
GBPCPI (YoY) (Jul)14:009.8%
USDCore Retail Sales (MoM) (Jul)20:30-0.1%
USDRetail Sales (MoM) (Jul)20:300.1%
USDCrude Oil Inventories22:30-0.275M