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Better data lifts risk, cryptos surge - CMC Markets

Contributor:
Fuseworks Media
Fuseworks Media

By Michael McCarthy (chief market strategist, CMC Markets and Stockbroking)

Global manufacturing was healthier than expected in July. PMIs in China, the UK, Italy, Germany and France all indicated expansion at a faster rate than forecast. The US PMI disappointed, but the ISM manufacturing read 15 minutes later jumped on a surge in new orders. The robust data lifted stocks and industrial commodities, and put bonds under modest pressure.

Despite the pro-risk trading the US dollar strengthened as longs took profit in Euro and the safe haven status of the yen lost its allure. Cryptocurrencies continued their recent rise. Ripple touched $0.32, to claim a better than 60% gain in 10 days. Bitcoin Cash is up more than 21% over the last week.

US reporting season is entering its final stages. With close to 70% of reports in, Healthcare is the best performing sector, with a 5% lift in both sales and profits. IT stocks lifted sales by 7%, but profits are down 2%. Oil and gas is the hardest hit, with falls of more than 50% in sales and earnings. Utilities stand out, with a 7.8% lift in profits despite a 6.4% slide in sales. Clorox reported strongly, and Mosaic bucked industry trends. Ralph Lauren (EPS f/c -$1.73) reports tonight.

The regional focus turns to Australian data today. Imports and exports are forecast to grow at 3% - 4% in June. Retail sales are expected to lift 2.4% over the same time, to record a quarterly fall of 3.0%. The Reserve Bank of Australia signalled recently that there will be no change to the current 0.25% cash rate at its meeting today. Analysts will hone in on the economic forecasts accompanying the announcement.

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