Climbing Treasury yields and concerns that interest rates might need to remain higher for longer to contain inflation proved too much for the major equity indices Thursday, with the S&P 500 Index and Nasdaq Composite sinking to their lowest levels since late June.  Shares have now fallen for three straight days.  Elsewhere in Europe, shares also ended lower yesterday, with the Euro Stoxx 50 Index down 1.3% to its lowest level in five weeks led by a decline in industrials and tech shares. 

Summary for 18.08.2023 

  • Asian markets were trying to find a firmer footing after a rough week, amid persistent fears of rising US interest rates, although signals of more Chinese stimulus measures helped local shares mark some gains. 
  • European shares are poised for a steady start while US futures were flat as investors look to next week’s Jackson Hole meeting. 
  • Oil prices rose in Asian trade this morning but were set to snap a seven-week winning streak as fears of a Chinese economic slowdown and rising US interest rates clouded the outlook for demand. 
  • Global government bond yields extended their climb yesterday, with the US 30-year reaching the highest point since 2011 and other benchmarks returning to 2008 levels – as resilient economic data challenges the view that central bank rates are peaking.  Both five- and 10-year Treasury yields rose Thursday to within a few basis points of their 2022 highs.  The equivalent UK yield jumped to a 15-year high, while its German counterpart approached the highest since 2011. 
  • Embattled developer China Evergrande Group has filed for protection from creditors in a US bankruptcy court as part of its debt restructuring process, as anxiety over China’s worsening property crisis and a weakening economy.  The company sought protection under Chapter 15 of the US bankruptcy code, which shields non-US companies that are undergoing restructurings from creditors that hope to sue them or tie up assets in the US. 
  • SoftBank’s Arm has filled out the roster of underwriters for its IPO, with 28 banks in all on the deal.  In addition to four lead banks – Barclays, Goldman Sachs, JPMorgan, and Mizuho, the offering will have 10 second-tier underwriters.  A third tier shall consist of a diverse group of 14 securities firms. 
  • Retail sales in the UK dropped by 1.2% from the previous month in July, reversing from a downwardly revised 0.6% rise in the prior month and worse than market expectations of a 0.5% fall.  This was the first decline in retail sales since March, weighed by poor weather.  On a yearly basis, retail trade shrank by 3.2%, a 16th consecutive month of decline, and compared with forecasts of a 2.1% fall. 
  • Adobe initially surged in Thursday’s session after Bank of America upgraded the share to “buy” from “neutral”, citing the software company’s potential leadership in artificial intelligence, only to fall victim to the broader weakness later in the session.  It ended about 0.5% lower. 
  • Nvidia also enjoyed an early pop yesterday on reports Oppenheimer had raised its price target for the AI company’s shares to $500 from $420, citing “robust” demand for AI, only to give up those gains later in the session.  It ended little changed. 
  • Similarly, Walmart reversed course during Thursday’s session to end about 2% lower even after topping earnings expectations and boosting its full-year consolidated sales growth forecast.  Shares had gained over 12% this year.  In a statement, Walmart CEO Doug McMillon said he’s “encouraged” by his company’s results in general merchandise compared to prior expectations, adding “we’re in good shape with inventory.”