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Wall Street major indices edged lower with the exception of Dow Jones Industrial that was the main winner of Tuesday’s US session. Higher US Treasury yields have impacted heavy-tech company earnings, spurring a selloff of tech stocks.
Sector-wise, the main winners are energy, financials, and real-estate, rising 3.06%, 1.24%, and 1.17%, each.
The main losers are consumer discretionary, technology, and communications, falling 1.47%, 0.97%, and 0.51%, respectively.
Meanwhile, the US bond market selloff continues; thus, Treasury yields keep rising after US President Joe Biden re-nominated Fed Chairman Jerome Powell to lead the Federal Reserve for the period ending in 2026.
Oil futures benefited from the tug of war game between OPEC+, on the one hand, and the coordinated efforts of largest oil consumers led by the United States. Oil futures rose sharply Tuesday after the Biden administration announced a coordinated, US-led effort by energy consuming countries to release strategic crude reserves.
Economic Data
UK Flash PMI has pointed to sustained robust output and jobs growth in November. The data released on Tuesday also indicated that UK businesses are buckling under the weight of costs swelling at the fastest pace on record, according to a closely watched survey released today.
The composite PMI came in at 57.7, slightly below analysts’ forecasts and down marginally on the previous month, but still above the third quarter average. A reading above 50 indicates growth.
As for the US economy, the preliminary reading of the HIS Markit showed mixed signs in November. The Manufacturing Index rose more than expected to 59.1, the highest in two months. The Service Sector Index fell unexpectedly to 57 from 58.7, against market consensus of 59.1. The Composite PMI dropped from 57.6 in October to 56.5 in November, below the market consensus of 57.4.
Other Developments
Policymaker Jonathan Haskel indicated, Tuesday, that the Bank of England needs to be watchful about rising labour costs as a tight job market means wages might rise faster than productivity and put upward pressure on inflation.
BoC’s Deputy Governor Paul Beaudry said the prevalence of highly indebted households, which are defined as those with a debt-to-income ratio above 350%, was expected to improve during the first year of the pandemic as many Canadians accumulated savings and paid down debt, but that situation appears to be reversing.
FOMC Minutes Eyed Traders
Currency markets have been mostly driven in recent months by market perceptions of the different paces at which global central banks reduce the pandemic-era stimulus and raise rates.
In that regard, Wednesday’s FOMC minutes of the 2-3rd November will be key because Fed officials have seemed to be increasingly open to discussing a faster pace of monetary policy normalization. The minutes of the meeting could shed some light there. If the bar is seen lower for accelerating tapering and bringing forward rate lift-off then this could well fuel another strong USD’s rally.
Also Read
Canadian Dollar Surges on Oil Prices
Wall Street Indices Edge lower
Oil Prices Surge Despite Tapping US SPR
The US Dollar Witnesses A Real Rally
BoC Raises Concerns Over Inflation
EUR/USD Opens Risk To 1.1000, FOMC Minutes Eyed
U.K. Flash PMI Reflects Sustained Robust Output And Jobs Growth
Treasury Yields Higher As Fed Expected To Act On Inflation
French fishermen Threaten Action Amid Stalling Brexit Talks
US Factory Activity Growth Kept Pace in November
