Stocks Wavers, Bond Yields Rise, Crude Eases

Barry Adams
06 Sep, 2022
New York City

Stocks on Wall Street opened higher and kicked off a 4-day week after falling for three days in a row. 

Crude oil prices eased on the expected decline in demand after China imposed tighter restrictions in several cities impacting as many as 30 million people. 

Yesterday, OPEC+ announced 100,000 barrels a day supply cut as demand softens in China and rising supply from Iran and Venezuela. 

The S&P 500 index decreased 0.2% to 3,917.16 and the Nasdaq Composite index declined 0.4% to 11,588,43. 

Futures of crude oil declined $1.40 to $87.32 a barrel and natural gas edged down 31 cents to $8.44 a thermal unit. 

The yield on 10-year Treasury notes rose 6 points to 3.26%, 30-year bonds increased 5 basis points to 3.406%, and 2-year notes advanced 4 basis points to 3.46%.

 

European Markets Advance, Germany's Factory Orders Fall 

European markets looked beyond weak German factory orders data and gained after energy prices eased and China announced stimulus measures. 

The DAX index gained 0.3% to 12,794.51, the CAC-40 index fell 0.5% to 6,064.11, and the FTSE 100 index fell 0.2% to 7,275.83. 

Germany's factory orders declined at a faster pace in July on the weak domestic and the eurozone demand.  

Factory orders fell 1.1% from the previous month in July Destatis reported Tuesday. 

The June orders were revised to an increase of 0.3%. 

The British pound edged up a fraction and traded near $1.15 after briefly falling near $1.14. 

The incoming prime minister Liz Truss has inherited a weak economy, elevated energy prices, sky-high inflation and general voter apathy. 

With low approval among her party members and even lower vote of confidence from voters, Truss faces challenges on multiple fronts and most political analysts anticipate the country to head to general polls in late 2023 or early 2024.  

The pound is expected to continue its slide and sink to a parity with the U.S. dollar. 

 

China Takes Steps to Support Yuan and Economic Growth 

China announced a slew of stimulus measures to revive the flagging economic growth and arrest the falling yuan.

At a press conference on Monday, officials from ministries, People's Bank of China and National Development and Reform Commission highlighted details of the plan in the third quarter. 

The one trillion yuan or $145 billion plan will focus on more infrastructure spending.  

The People's Bank of China, after the press conference, lowered the foreign currency reserve ratio by 2 percentage points. 

China's yuan closed down to a new two-year low of 6.955 against the U.S. dollar and the currency has fallen for the sixth month in a row.