Wall Street outperforms Europe, Kiwi flies
Stock markets in Europe started out on a positive note as there was a bullish session in Asia overnight, but only the DAX is set to close in positive territory. Yesterday, optimism ran through the markets as a whole, and US stocks notched up a record close following the announcement from the Food and Drug Administration, who fully approved the Pfizer-BioNTech Covid-19 vaccine. Some of that positivity is still doing the rounds as fresh records have been posted in the US, but most benchmarks on this side of the Atlantic are in the red. Volatility is low as it has been a relatively slow news day.
This morning it was confirmed the German economy grew by 1.6% in the second quarter, revised up from 1.5%. Germany is the largest economy in the eurozone, so its recovery bodes well for the bloc. The DAX is the outlier for Europe as it is up 0.35%, while the FTSE 100 and the CAC 40 are down 0.05% and 0.0.25% respectively.
The US posted mixed housing data as the new home sales reading for July was 708,000, beating the 698,000 forecast. The update for June was revised from 676,000 to 701,000 – which is the lowest in over one year. Transactions are falling but the median selling price jumped to a record of $390,500, which suggests the dwindling number of buyers are very eager to purchase a new property.
The foreign exchange market has also been quiet today too as the US dollar is down fractionally. In the past two sessions, the greenback saw a new nine moth high, followed by a sharp pullback, while today’s move has been muted. Despite the decline in the dollar recently, its wider uptrend is still in effect, and it is likely that volatility will remain low until the Jackson Hole Symposium, which will kick off on Thursday.
The New Zealand dollar is outperforming as Christian Hawkesby, the assistant governor of the Reserve Bank of New Zealand, claimed they didn’t hike rates last week due to communication difficulties. Mr Hawkesby, stated that demand is stronger than expected. It was also revealed the central bank considered lifting rates by 50 basis points, which seems bullish for the current climate.
Gold continues to move higher, albeit at a slower pace than yesterday, as the metal is once again benefitting from the weaker US dollar. The asset hit its highest mark in almost three weeks – it has now recovered all the ground that was lost following the very strong US non-farm payrolls report at the start of the month. In recent weeks, there has been a lot of talk about the Fed potentially tapering its stimulus scheme later this year, so traders will be listening out for that sort of commentary from Jackson Hole.