US yields revisit highs

US equities edged higher in a relatively quiet day Monday, with the S&P 500 Index and Nasdaq Composite recovering a bit of the ground lost last week, as investors hunkered down to wait for trading cues from upcoming economic data releases and the start of the next earnings season. The Dow Jones closed more than 40 points higher, while the S&P 500 and the Nasdaq held on gains adding over 0.2% each. Meanwhile, European shares extended their losses, with the Euro Stoxx 50 Index dropping by almost 1% to reach a six-month low of 4,167 points. 

Summary for 26.09.2023 

• Asian equity markets fell again on Tuesday, remaining under pressure from concerns that major central banks would keep interest rates higher for longer. A strong dollar, surging Treasury yields, and higher oil prices also weighed on sentiment. Moreover, investors fretted about warnings of a US government shutdown and another failure to repay an onshore bond by a Chinese property firm. Shares in Australia, Japan, South Korea, Hong Kong, and mainland China all declined. 
• European shares are on track to resume declines as Treasury yields and the dollar advanced, while US equity futures were steady in the early hours of Tuesday morning. 
• Oil prices fell slightly in Asian trade this morning amid growing fears that higher-for-longer US interest rates will weigh on demand, while renewed concerns over China’s economy also dented sentiment. Strength in the dollar put a dumper on oil prices, as hawkish signals from the Federal Reserve saw the greenback scale a 10-month peak, pushing up crude costs for international buyers.  
• Rating agency Moody’s said on Monday a US government shutdown would be “credit negative” as it would highlight the weakness of US institutional and governance strength compared to other top-rated governments, even though its economic impact will likely be short-lived. 
• The Ifo Business Climate indicator for Germany edged down to 85.7 in September, slightly lower than August’s revised figure of 85.8 but exceeding the market consensus of 85.2. Sentiment deteriorated for the fifth consecutive month as companies became less satisfied with their current business situation compared to the previous month. However, their pessimism regarding the coming months slightly improved. 
• Amazon was up 1.7% yesterday after saying it would invest up to $4 billion in artificial intelligence (AI) startup Anthropic. Amazon said it would use Anthropic’s chips to develop its own AI tool. 
• Netflix closed 1.3% higher on Monday following reports the Writers Guild of America had reached a tentative agreement with a group representing studios and streaming services to end a writers’ strike. Paramount Global was 0.2% higher, and Walt Disney slipped about 0.3%.