As London/European traders head for the exits, the major European equity indices are closing mixed, but Germany’s DAX and Spain’s Ibex stand out after closing at new record highs. The DAX rose 0.26%, while the Ibex added 0.20%, extending the recent run of record-setting performances across European equities. European markets have been pushing into record territory recently amid strong corporate earnings and optimism surrounding U.S.-Iran negotiations.
The closing levels show:
- German DAX: +0.26% at 26,391.43 — record close
- France CAC 40: -0.13% at 8,714.95
- UK FTSE 100: -0.17% at 10,844.20
- Spain’s Ibex: +0.20% at 20,213.61 — record close
- Italy’s FTSE MIB: +0.08% at 53,706.20
The relatively subdued moves come as investors continue to weigh developments in the Middle East. Pakistan’s Defense Minister Khawaja Asif said today that the U.S. and Iran are close to “some sort of an arrangement,” adding that recent signals suggest things are moving toward a peace agreement. Qatar has also indicated that negotiations over the Strait of Hormuz have reached an advanced stage. However, shipping disruptions and disagreements over the terms of an agreement continue to keep uncertainty elevated.
In the European debt market, benchmark 10-year yields moved lower across the board:
- Germany: 3.158%, -2.6 basis points
- France: 3.977%, -1.1 basis points
- UK: 4.965%, -3.5 basis points
- Spain: 3.599%, -2.7 basis points
- Italy: 3.952%, -2.7 basis points
US stocks trade mixed
As European traders head home, the major U.S. stock indices are also trading mixed, with the Russell 2000 outperforming while the Nasdaq is the weakest of the major indices.
- Dow Industrial Average: -30.02 points or -0.06% at 53,951.38
- S&P 500: -6.58 points or -0.08% at 7,746.54
- NASDAQ Composite: -87.89 points or -0.33% at 26,517.46
- Russell 2000: +13.29 points or +0.44% at 3,030.69
In the U.S. debt market, yields are lower across the curve and near the lows for the day. Yields are higher at ths start of the US session. After the weaker US jobs report, the market is pricing closer to a 50-50 chance of a hike in September. The US CPI data will be released tomorrow and will be a key piece of data on how that bias shifts – at least in the short term:
- 2-year: 4.226%, -1.3 basis points
- 5-year: 4.391%, -1.4 basis points
- 10-year: 4.686%, -1.2 basis points
- 30-year: 5.235%, -0.8 basis points
Oil remains higher
Crude oil continues to trade higher despite the more optimistic comments surrounding a potential U.S.-Iran agreement. The uncertainty over the Strait of Hormuz remains a key driver, leaving oil particularly sensitive to headlines.
- WTI crude oil: $83.10, +$0.81 or +0.96%. The high price reached $84.61. The low price was at $81.27.
- Gold: $4,379.30, -$11.35 or -0.26%
- Silver: $64.846, -$0.835 or -1.27%
- Bitcoin: $63,567, -$559 or -0.88%
U.S. existing home sales were slightly better than expected in July, but the overall housing market remains sluggish as elevated mortgage rates continue to weigh on affordability and turnover.
- Existing home sales: 4.06 million annualized vs. 4.05 million expected
- Prior: revised higher to 4.13 million from 4.09 million
- Monthly change: -1.7%, following a revised -1.4% decline in June
- Median home price: $434,100
- Prices: +2.0% year-over-year
- Inventory: 4.6 months of supply, unchanged from June
Bottom line: July sales essentially matched expectations but declined for a second straight month after the stronger activity seen in the spring. High mortgage rates remain the primary headwind, limiting affordability and keeping many existing homeowners reluctant to move. Inventory has improved compared with the tighter conditions of recent years, but at 4.6 months of supply, it remains below levels normally associated with a fully balanced market. Meanwhile, prices continue to rise, although the relatively modest 2.0% annual increase suggests affordability is gradually improving when adjusted for income growth and inflation.
Overall, the tone is relatively cautious as European traders exit. European equities finished mixed, bond yields moved lower on both sides of the Atlantic, and U.S. equities are struggling for direction. Meanwhile, oil remains the market to watch as traders continue to react to each headline surrounding the U.S.-Iran negotiations and the potential reopening of the Strait of Hormuz.
This article was written by Greg Michalowski at investinglive.com.
