Daily market review

United States

A further and sharp drop in bond yields headlined Monday's US session in reaction to slowing in the ISM manufacturing report. The Dow fell 0.3 percent, the S&P 500 fell 0.2 percent, while the Nasdaq ended 0.1 percent higher.

The ISM index dipped below the 60-mark after six months above it to 59.5 in July. This was 1.3 points below Econoday's consensus and just below the low end of the consensus range. Comments from ISM survey respondents highlighted short supplies of materials, delays in deliveries, and difficulties in finding qualified workers.

A $1 trillion US infrastructure package, centered on roads and internet access, is working its way through the Senate with a final vote possible as early as this week. Oil fell sharply on talk of OPEC over-production and on global concerns over Covid.

Covid's Delta variant is of increasing concern in the US as health officials warn, not of a shutdown, but of renewed restrictions including increased use of masks. A host of US companies, including major retailers Wal-Mart and Target, are issuing new mask directives.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$3.23 to US$73.10 while spot gold rose US$0.50 to US$1,817.70. The US dollar was mixed vs. major currencies. The US Treasury 30-year bond yield fell 4 basis points to 1.85 percent and the 10-year note yield fell 5 basis points to 1.18 percent.


A nearly £6.3 billion bid for Meggitt plc helped lift European stocks Monday: UK's FTSE gained 0.7 percent, France's CAC 1.0 percent, and Germany's DAX 0.2 percent.

US industrial firm Parker-Hannifin is offering a roughly 70 percent premium for the UK aerospace firm whose shares surged nearly 60 percent. Adding to the merger-and-acquisition boost were deals underway for UK asset-management services provider Sanne Group and German real estate firm Deutsche Wohnen.

Earnings news has been mostly positive led Monday by insurer Axa which gained 4.2 percent and included Heineken, up 0.6 percent, which beat expectations though is warning about high input costs.

Swiss data were led by a 0.1 percent decline in July consumer prices, one that underscores the global risk of disinflationary forces that may yet reemerge, and also included a rise of only 0.1 percent for June retail sales that saw broad-based weakness. The Swiss Market Index rose 0.4 percent.

Asia Pacific

A flat manufacturing PMI for China, barely over breakeven 50 at 50.3 in July, is deepening questions over the effects of supply-side disruptions and slowing in China. The reading, posted Monday, confirmed a 50.4 score in China's official CLFP manufacturing index released over the weekend.

Asian stocks, nevertheless, mostly posted strong gains with the Shanghai Composite and Japan's Topix both up 2.0 percent. Covid news in China and Japan, however, has not been favorable.

Industrial production in Singapore fell a monthly 3.0 percent in June as stricter health restrictions were put in place late that month. The Straits Times edged 0.2 percent lower.

Easing restrictions in India made for a more than 7-point surge in India's manufacturing PMI to a comparatively robust level of 55.3. Payrolls in the sample rose for the first time in 16 months. The Bombay Sensex ended 0.7 percent higher.

Economic data also helped South Korea's Kospi which gained 0.6 percent as the country's exports and imports extended strong recovery into July.

Looking ahead*

In Asia/Pacific, the Reserve Bank of Australia's policy announcement and Korea's CPI report are due. In Europe, Switzerland's SECO Consumer Climate and the Eurozone's PPI will be posted. In North America, US factory orders will be released.

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