Concerned about the global economy and economic and trade relations, US stocks closed slightly higher

Release time：Jul 04, 2019 From：admin

Sina US stock news Beijing time on the morning of the 31st, US stocks closed slightly higher on Thursday. Investors are still concerned about the prospects for global economic growth and tight economic and trade relations. US Treasury yields remained at their lowest level since 2017. US GDP grew by 3.1% in the first quarter.

At 16:00 on May 30th (04:00 on May 31st, Beijing time), the Dow rose 43.47 points, or 0.17%, to 25169.88 points; the S&P 500 index rose 5.84 points, or 0.21%, to 2788.86. Point; the Nasdaq rose 20.41 points, or 0.27%, to 7567.72 points.

Keysight Technologies leads the technology sector. The company announced that its earnings exceeded expectations and its share price rose more than 11%.

Recent fluctuations in US Treasury yields have received much attention. On Thursday morning, US 10-year bond yields rebounded to 2.26%, and the yield fell to 2.21% on Wednesday. German 10-year bond yields rose by one basis point to -0.17%. Japan’s 10-year government bond yields rose by one basis point to -0.079%.

On Thursday afternoon, the US 10-year bond yields retreated early and fell back to 2.227%, the lowest level in 20 months. Affected by this, the three major stock indexes of the US stock market fell once in the afternoon on Thursday.

The government bond market also issued a warning signal that the US 3-month bond yield and the 10-year bond yields were once again upside down, and the spread widened to the highest level since 2007. The inversion of Treasury yields usually indicates that the recession is about to break out.

Ryan Nauman, market strategist at Informa Financial Intelligence, said: "It (decline in Treasury yields) is a sign that economic growth is slowing. It has become the source of high stock market risk aversion in May. People are moving out of the stock market and transferring to national debt and Other safe haven asset markets."

The tense international economic and trade relations continue to put pressure on the US stock market this week. The decline in government bond yields suggests that investors are increasingly worried about the uncertainty of the market outlook. The possibility of China’s cessation of rare earth mineral exports and the status quo of the EU’s negotiations have not made progress, making international economic and trade relations even more tense.

Analysts said that Europe and the United States are facing difficulties at the moment, and the hopes of the two sides to reach an economic and trade agreement are very low. Trump and European Commission President Juncker reached a rose garden truce 10 months ago to clear the barriers to negotiations, but to date, these negotiations have shown little sign of any meaningful progress.

At a time when trade frictions in Europe and the United States have intensified, tensions between the United States and the European Union on the Iranian nuclear deal have escalated.

The struggle between the Trump administration and EU countries around the future of the Iranian nuclear deal has once again warmed up. Germany, the United Kingdom and France have set up a financial institution to protect them from US sanctions when they trade with Iran, while the United States threatens to take punitive measures.

The turmoil in the financial markets has also increased investor expectations for the Fed to cut interest rates. Fed Watch, CME's CME interest rate watch tool, showed that the probability of a rate cut by the Fed has risen to 82% during the year, and the probability of a rate cut of two or more has soared to 42.7% from 23.2% at the end of April.

John Bilton, head of multi-asset strategy at JP Morgan Global, said: "Everything that happens in the Treasury market is, in the final analysis, a reassessment of growth expectations. Even if the bond yield curve is upside down, we still don't think it will be in the next 12 months. A recession has occurred."

Economic data

According to data released by the US Department of Commerce on Thursday, the US real GDP revision rate in the first quarter increased by 3.1%, expected to be 3.0%, and the initial value was 3.2%. The initial value of the annual GDP growth in the US in the first quarter was 3.2%, the highest level since the third quarter of 2018.

In addition, the data also shows that the United States in the first quarter of the core personal consumption expenditure (PCE) annualized quarter-on-quarter correction of 1%, expected 1.3%, the previous value of 1.3%; US first quarter personal consumption expenditure (PCE) annualized quarter-on-quarter correction of 1.3 %, expected 1.2%, the previous value is 1.2%.

In the second quarter, when economic growth seems to be slowing, the weak inflation data released by the US Commerce Department on Thursday may increase the pressure on the Fed to cut interest rates. Federal Reserve Chairman Powell recently said that he believes that moderate inflation "may be only temporary."

Federal Reserve Vice Chairman Richard Clarida said on Thursday that the US economy is in a good position, but the Fed is focusing on downside risks in an effort to maintain the long-term economic expansion period that is expected to be the longest.

Clarida said: "The US economy is in a very good position, the unemployment rate is close to a 50-year low, inflationary pressures are flat, inflation is expected to be stable, GDP growth is solid and is expected to remain in this state."

However, he cautioned that if the data show that the Fed’s 2% inflation target “continues to fail” or that “global economic and financial development poses a significant downside risk to our baseline outlook”, the Federal Open Market Committee is in monetary policy decision-making. These factors will be taken into account.

Sung Won Sohn, a professor of economics at Loyola Marymount University in Los Angeles, said: "Low inflation data may continue. As inflation and economic growth go in the wrong direction, the Fed is likely to cut interest rates later this year."

The US Department of Labor announced that the number of US initial jobless claims last week was 215,000; an estimated 21.4 million. In addition, the number of US jobless claims for the week of May 18 was 1.657 million, with an expected value of 1.626 million and a previous value of 1.76 million.

According to the agency comment, although the temporary stimulus caused by the fluctuations in exports and inventory in the first quarter has subsided, economic activity has slowed down, industrial output, durable goods orders, retail sales and home sales have declined, but the stable labor market will support economic growth. .

The US Census Bureau released a preliminary report on Thursday that showed that the US trade deficit in April was $72.1 billion, lower than the expected $72.7 billion, but higher than the previous value of $71.4 billion.

According to data released by the National Association of Realtors, the second-hand housing contract index fell by 1.5% in April from the previous month, weaker than all economists expected. The index rose 3.9% in March. On an unadjusted basis, the index rose by 0.4% compared with the same period of the previous year, which was the first positive growth in a year, indicating that the market was stable.

The foreign exchange information website Dailyfx wrote that since February, US economic data has often performed worse than economists' expectations, suggesting that analysts are too optimistic about the US economic growth prospects.