North American News
Stocks close lower for the 4th day in a row
- Gains can not be maintained
The month is closing down for all the major indices, and the major indices are also closing down for the 4th consecutive day.
A look at the major indices for the day are showing:
- Dow industrial average -279.8 points or -0.828% at 31511.08
- S&P index -31.13 points at -0.78% at 3955.02
- NASDAQ index -66.92 points at -0.56% at 11816.21
- Russell 2000-11.480 points or -0.62% at 1844.11
For the calendar month
- Dow industrial average fell -4.07%
- S&P fell -4.,26%
- Nasdaq fell -4.64%
- Russell 2000 fell -2.24%
Commodities
Gold rebounds as US yields turn to the downside
- XAUUSD rises more than $10 from monthly lows.
- US yields retreat after ADP data, DXY turns negative.
- Stocks in Wall Street fail to hold to gains.
Gold prices are modestly down on Wednesday but off lows. During the American session, XAU/USD rebounded from the one-month low at $1709 and rose to $1723. It is hovering around $1720.
The rebound in gold is preventing a daily close under $1715 which would be a negative technical development suggesting more losses ahead, targeting $1700. Below the next level to watch is the July low at $1680. The immediate resistance on the upside is located at $1725; above the bearish pressure would ease.
Yields down
US yields are now falling on Wednesday. Following the August ADP employment report, the demand for Treasuries rose. The employment numbers came in below expectations with the private sector adding 132K jobs versus the 288K of market consensus. On Thursday the ISM Manufacturing is due and on Friday, the Non-farm payroll (consensus: 300K).
The US 10-year yield peaked at 3.16%, the highest level in two months and then pulled back to 3.10%; the 2-year yield retreat from the highest since 2007 at 3.49% to 3.43%. The decline in yields weakened the greenback, helping XAUUSD. The US Dollar Index falls 0.35% on Wednesday and is back under 108.50. The DXY continues to move sideways, holding between 108.00 and 109.00.
Despite the move lower in yields, the doors for a 75 basis points rate hike from the Federal Reserve are still open. Also, despite the rebound, the primary trend in XAU/USD is still bearish.
US weekly crude oil inventories -3326K vs -1483K expected
- Weekly US oil inventory data released Aug 31, 2022
- Prior was -3282K
- Gasoline -1172K vs -1178K expected
- Distillates +111K vs +960K expected
- Refinery utilization -1.1% vs -0.4% expected
- Implied gasoline demand 8.591m vs 8.43m last week
- SPR draw of 3.1m vs 8.1m prior
Here’s what the API reported late yesterday:
- Crude +593K
- Gasoline -3414K
- Distillates -1726K
- Cushing -599K
EU News
European equity close: Stock markets headed in the opposite direction of the euro
- Closing changes for the main European equity markets
The euro is higher today on the prospects for 75 bps from the ECB next week (now fully priced in) but those rate hikes won’t help the eurozone economy or stock markets.
- Stoxx 600 -1.0%
- German DAX -0.9%
- UK FTSE 100 -1.0%
- French CAC -1.2%
- Italy MIB -1.0%
- Spain IBEX -0.7%
ECB’s Holzmann: The minimum next week is 50 bps and 75 bps should be debated
- Holzmann said the same on the weekend
The market is now fully pricing in 75 bps so that’s what is expected now. That raises a new round of risks for the euro as it flirts with parity.
Other News
Yellen says substantial progress made on G7 Russia oil-price cap
- US continues to push for a cap starting in December
The US continues to lead to place a price cap on Russian oil. The Russians are clearly worried because they’ve moved to supply long-term price contracts with some countries at substantial discounts.
This kind of mechanism has never been tried before so it’s tough to model out. Any drop in Russian oil supplied to the market is bearish for oil but the thinking at the moment is that they’ll trans ship it and find a way to get it to market. However it could lead to some local price dislocations.
Cryptocurrency News
Michael Saylor sued for tax evasion in Washington DC
- Lawsuit relates to the tech executive’s place of residence
Bitcoin evangelist Michael Saylor is being sued by the District of Columbia for tax evasion, the DC attorney general reported. His company, Microstrategy, is also being sued for conspiring with him to evade taxes. Shares of the company — which holds a huge position in bitcoin — are down 4.5% and at the lowest in six weeks.
“Today, we’re suing Michael Saylor – a billionaire tech executive who has lived in the District for more than a decade but has never paid any DC income taxes – for tax fraud,” said DC Attorney General Karl Racine in a tweet.