Three major US stock indexes fell for three consecutive days. Most blue-chip technology stocks turned lower during the session, with Microsoft down more than 1%, and NVIDIA bucking the trend with a rise of over 1%. The energy sector rose more than 2%, while Chinese concept stocks outperformed the broader market, with the Chinese concept index up over 3%. JD.com rose nearly 5%, while NIO-SW and Tencent both rose more than 4%. European stock indexes rebounded, but still recorded the largest weekly decline in nearly four months, down more than 3% for the week. After the release of non-farm payroll data, the two-year US Treasury yield moved away from its highest level since 2007, while the ten-year yield hit a four-month high. The US dollar index accelerated its decline, reaching a two-week low. The Japanese yen reached a two-week high, and the offshore renminbi briefly rebounded by 400 points. Brent crude oil hit a two-month high, with a weekly gain of over 4%, the largest in three months. Gold recorded its largest daily gain in a month, ending a three-week decline.
On Friday, the June US non-farm payroll report was released, showing that the number of new non-farm jobs added in June fell more than expected to 209,000, reaching a two-year low. However, the number of jobs still exceeded 200,000. The unemployment rate in June decreased slightly as expected to 3.4%, and both the year-on-year and month-on-month growth rates of average hourly wages exceeded expectations.
Commentators pointed out that the growth of new non-farm jobs did not explode like the "small non-farm" private sector employment data released on Thursday. Although the growth of non-farm jobs has slowed down, it remains strong. Moreover, the pressure for wage increases is too high, which almost completely eliminates the reason for the Federal Reserve to continue pausing interest rate hikes in July. It is expected that the Fed will resume raising interest rates in July. However, traders have expressed doubts about whether the Fed will continue to raise interest rates after July.
After the employment data was released, US Treasury yields initially declined and then rebounded, showing a short-term V-shaped rebound. The performance of US stocks after the market opened was mixed. The intensified expectations of the Federal Reserve's accelerated tightening caused by the "small non-farm" data on Thursday have eased, and the two-year US Treasury yield, which is sensitive to interest rate prospects, has moved away from the high point reached on Thursday, which was the highest since 2007. The US stock market basically maintained a downward trend during the trading session, while the benchmark 10-year US Treasury yield, which hit a four-month high before the market opened, fell back during the morning session and rebounded during the afternoon session. The US dollar index accelerated its decline and quickly fell below 103.00 after the data was released, reaching a low point in more than a week.
On Friday, major US stock indices showed mixed trends during the trading session. The S&P 500 and Nasdaq Composite Index initially turned positive but fell in the final hour of trading. Due to the hawkish signals released in the Federal Reserve minutes and the strengthening of interest rate hike expectations caused by the employment data, US stocks had a "black start" in July, the second quarter, and the first week of the second half of the year. However, Chinese concept stocks rebounded strongly, reversing the decline seen on Thursday. According to the announcement by the China Securities Regulatory Commission, the financial regulatory authority imposed a fine of 7.123 billion yuan on the group, and the focus of their work has shifted from promoting the centralized rectification of platform companies' financial businesses to normalized supervision. Alibaba's US stocks soared.
As the US dollar continued to weaken, non-US currencies rose across the board. The offshore renminbi rebounded by about 400 points from its intraday low, rising for the fourth day this week. The yen against the US dollar reached a two-week high, rising more than 2% from the threshold of 145 when the Japanese government intervened to boost the yen last year. Analysts believe that risk aversion has become the theme of this week, but the yield of the benchmark 10-year US Treasury bond is still above 4%. Therefore, any appreciation of the yen may be limited, and the market is concerned that the Japanese government may be closer to intervening in the foreign exchange market.
Boosted by the weakening US dollar, various commodities have risen. Market expectations for the Federal Reserve's tightening have eased compared to Thursday. Gold rebounded strongly, rising more than 1% at one point during the trading session, marking the best single-day performance in about a month. With the rebound on Friday, it recorded the first weekly gain in a month. International crude oil, which experienced V-shaped oscillations on Thursday, accelerated its upward trend, with Brent crude oil hitting a two-month high and recording a gain of more than 2% for the first time in three weeks. This week, as Saudi Arabia and Russia both announced measures to reduce supply and the Saudi Energy Minister stated that OPEC+ will take all necessary actions to support the oil market, crude oil has risen by at least 4%, marking the largest weekly gain in three months. Comments said that on Friday, concerns about oil supply and buying pressure on the technical side outweighed concerns about the central bank's continued interest rate hike. Brent crude oil entered the overbought zone for the first time since mid-April. On Friday, a fire broke out on an offshore platform owned by Mexican state-owned company Pemex in the Gulf of Mexico, injuring six people. On Friday, oilfield services giant Baker Hughes announced that the number of oil and gas drilling rigs in the United States increased for the first time in ten weeks. Due to a shortage of manpower, Equinor ASA of Norway announced a temporary shutdown of production at the Oseberg East oil field in the North Sea.
The three major U.S. stock indexes all opened lower. The Dow Jones Industrial Average maintained its downward trend in early trading, falling more than 150 points and more than 0.4% at the beginning of the session, but rebounded at midday. The S&P 500 index turned higher shortly after the opening, but quickly turned lower, falling 0.3% at the lowest point of the day, and completely shaking off the downward trend at the end of the morning session. The Nasdaq Composite Index initially rose, but turned lower about an hour after the opening, falling nearly 0.2% at the lowest point of the day, and quickly rebounded and maintained its upward trend. At midday, the Nasdaq reached a new high, rising more than 0.9%, the S&P rose nearly 0.7%, and the Dow rose about 114 points, or more than 0.3%, but then fell back. The Dow turned lower before the end of the session, and the S&P and Nasdaq also turned lower.
In the end, the three major indexes all fell for three consecutive days. The Dow fell 187.38 points, or 0.55%, to 33,734.88 points. After closing below 34,000 points for the first time since June 28 on Thursday, it hit a new low since June 28. The S&P fell 0.29% to 4,398.95 points, and the Nasdaq fell 0.13% to 13,660.72 points, both hitting new lows since last Thursday, June 29, for two consecutive days.
The small-cap Russell 2000, which is dominated by value stocks, rose 1.22%, rebounding from its recent low after two consecutive days of decline, outperforming the broader market. The tech-heavy Nasdaq 100 index fell 0.35%, continuing its two-day decline and hitting a new low since June 29.
In this week's four trading days, all three indexes fell, retreating after last week's rebound. The Nasdaq fell 0.92%, the S&P fell 1.16%, marking the second consecutive weekly decline in the past 11 weeks and eight weeks, respectively. The Dow fell 1.96%, and the Russell 2000 fell 1.27%, both marking the second consecutive weekly decline in the past six weeks. The Nasdaq 100 fell 0.94%, marking the second consecutive weekly decline in the past three weeks.
Trends of major U.S. stock indexes this week
Among the major sectors of the S&P 500, six sectors closed lower on Friday, with consumer staples down more than 1.3% and healthcare down nearly 1.2%, while the IT sector, which includes Apple, was down more than 0.4%, with the smallest decline. Among the five sectors that closed higher, the energy sector, which fell more than 2% on Thursday, rose nearly 2.1%, materials rose nearly 0.9%, and industrials, financials, and non-essential consumer goods, including Amazon, all rose less than 0.3%. This week, only the real estate sector saw a cumulative increase of 0.2%, with healthcare leading the decline at nearly 2.9%, materials falling by 2%, and defensive utilities dropping by 0.2%, ranking last in terms of decline.
Overall, popular Chinese concept stocks that had been declining for two consecutive days rebounded and outperformed the broader market. The Nasdaq Golden Dragon China Index (HXC) closed up by approximately 3.2%, with a cumulative increase of about 1.6% for the week. Chinese concept ETFs KWEB and CQQQ closed up by approximately 3.7% and 1.9% respectively. Among individual stocks, by the end of the trading day, Alibaba, which had previously surged more than 9%, saw a slight increase of over 8%, JD.com closed up nearly 5%, Tencent, NIO, Baidu, Pinduoduo, Weibo all rose by more than 3%, iQiyi, Bilibili, Ctrip, Kingsoft Cloud increased by more than 2%, and Xpeng Motors and Li Auto rose by more than 1% and 0.1% respectively.
Leading technology stocks turned mostly negative during midday trading. Tesla initially rose by 1.5% but fell by nearly 0.8% at midday, continuing its decline for two consecutive days after a six-day rally, further distancing itself from the high point reached in September last year. Among the FAANMG six major technology stocks, Microsoft, which had risen against the market on Thursday to reach a high not seen since June 16, fell by approximately 1.2%; Apple, which had a slight increase on Thursday, fell by approximately 0.6%, both Microsoft and Apple fell to lows not seen since last Thursday, maintaining a market value of $3 trillion for five consecutive trading days; Alphabet, the parent company of Google, fell by 0.5%, while Netflix fell by nearly 0.2%, both falling for two consecutive days to lows not seen since last Thursday; Meta, the parent company of Facebook, which rebounded on Wednesday to reach a high not seen since January last year, continued to decline, closing down by 0.5%; Amazon, which fell on Thursday, maintained its upward trend throughout the day, closing up by 1.1%, approaching the closing high reached on Wednesday since September last year.
Overall, chip stocks, which had underperformed the broader market for two consecutive days, rebounded during midday trading but gave back most of their gains towards the end of the session. The Philadelphia Semiconductor Index and the Semiconductor Industry ETF SOXX closed slightly up, almost flat, with cumulative declines of 2.6% and 2.5% respectively for the week. At the close, Nvidia rose by nearly 1%, Qualcomm rose by 0.6%, while Micron Technology fell by nearly 0.8%, Intel fell by nearly 0.4%, and AMD fell by nearly 0.3%. AI concept stocks that underperformed the broader market on Thursday also gave back most of their gains during midday trading. C3.ai (AI) surged more than 5% in the morning and closed up by over 0.4%, SoundHound.ai (SOUN) initially rose by over 9% and closed up by over 3%, BigBear.ai (BBAI) surged nearly 5% in the morning and closed up by 1.4%.
The banking sector, which had declined for two consecutive days, maintained its rebound during midday trading, outperforming the broader market, with regional banks performing better. The KBW Bank Index (BKX), which had fallen to a low not seen since June 28 on Thursday, closed up by nearly 1.4%; the KBW Nasdaq Regional Banking Index (KRX), which had fallen to a low not seen since June 21 on Thursday, closed up by approximately 2%; and the SPDR S&P Regional Banking ETF (KRE), which had refreshed its low not seen since June 26 on Thursday, closed up by nearly 2.2%. Most major banks saw small gains, with Bank of America leading the way with a nearly 0.9% increase, while Wells Fargo saw a decline of nearly 0.3%. Among regional banks, Zions Bancorporation (ZION) rose more than 4.3%, Alliance West Bancorp (WAL) rose over 3.4%, Keycorp (KEY) rose 1.7%, and PacWest Bancorp (PACW) rose nearly 0.9%.
In terms of volatile stocks, Rivian (RIVN), a competitor to Tesla, saw a 14.3% increase after Wedbush Bank raised its target price by 20% to $30, implying a nearly 39% increase from Thursday's closing price. TG Therapeutics (TGTX) rose 8.3% after Cantor Fitzgerald reaffirmed its overweight rating and predicted higher-than-expected sales of its Briumvi drug for relapsing multiple sclerosis in the second quarter. DraftKings (DKNG), a sports betting company, rose 5.6% after Jefferies predicted that its stock price would rise due to the company's return to profitability. On the other hand, Levi's (LEVI), a denim brand that lowered its full-year profit guidance, saw a decline of 7.7%.
Concerns about aggressive interest rate hikes eased due to the US non-farm payroll data, leading to a slight rebound in European stock indices, which had fallen for two consecutive days. The STOXX Europe 600 Index temporarily rebounded from its closing low on March 28, which was set on Thursday. Most major European stock indices rose on Friday, with the German and French indices rebounding after four consecutive days of decline, and the Italian and Spanish indices rebounding after three consecutive days of decline. However, the UK and Spanish indices fell for five and four consecutive days, respectively.
In the STOXX Europe 600 sectors, healthcare declined by more than 1%, while real estate, which had declined the most on Thursday, rebounded slightly, rising nearly 0.5%. Basic resources, which had fallen more than 3% on Thursday, rose more than 1%, as did chemicals, leading the gains. Among individual stocks, OSB Group, a UK lending institution, plummeted 28.8% after estimating that customer refinancing of mortgage loans resulted in a loss of up to £180 million, reaching a new low since November 2020 and becoming the biggest decliner among STOXX 600 constituents.
The STOXX Europe 600 Index fell more than 3% for the first time in a single week since March 17, breaking the previous record set two weeks ago. This week, all major stock indices fell collectively, with declines of at least 2% on Thursday, erasing the gains from the previous week. German, French, and Spanish stocks all fell more than 3%, while UK stocks also declined by over 3%, wiping out last week's gains.
Among the sectors, only real estate saw a cumulative increase this week, rising by 0.4%. Tourism rose more than 1% on Friday, but still experienced a decline of over 4% for the entire week, along with healthcare and engineering sectors.
Two-year Treasury Yield Diverges from Highs Since 2007, Ten-year Treasury Yield Hits Four-Month High
European government bond prices fluctuated, following the decline in US Treasury yields during the session. The yields of UK bonds and short-term German bonds both declined during the session, while the yields of medium and long-term German bonds maintained their upward trend.
The yield on UK 10-year benchmark government bonds closed at 4.64%, down 1 basis point intraday. Earlier, it briefly rose above 4.71% before retreating, reaching the highest level since October 2008. The yield on 2-year UK bonds closed at 5.36%, down 11 basis points intraday, significantly lower than the high of 5.50% reached on Thursday, which was the highest level since 2008. The yield on 10-year German government bonds closed at 2.63%, up 1 basis point intraday. Earlier, it approached 2.68% before the US stock market opened, continuing to reach the highest level since March 9. After the US stock market opened, most of the gains were erased. The yield on 2-year German bonds closed at 3.24%, down 3 basis points intraday, significantly lower than the high of 3.35% reached on Thursday, which was the highest level since March 9.
In a week of rising expectations of central bank rate hikes, European bond yields have risen for two consecutive weeks, with the fourth week of gains in the past five weeks. The yield on UK 10-year bonds has risen by about 26 basis points, and the yield on 10-year German bonds has risen by about 24 basis points, far exceeding the gains of the previous week. The yields on 2-year short-term bonds have generally increased less than those on long-term bonds.
The yield on US 10-year benchmark government bonds was above 4.07% before the release of non-farm payroll data, rising by about 1 basis point intraday. After the data was released, it quickly retraced its gains and briefly fell below 4.00%, reaching a daily low. It then declined by nearly 3 basis points intraday but quickly rebounded to erase the decline. Earlier, it approached 4.09% before the US stock market opened, rising by more than 6 basis points intraday, reaching the highest level in about four months for the third consecutive day. After the US stock market opened, it fell back, briefly falling below 4.03% and erasing all gains, but then continued to rise. At the end of the bond market session, it was around 4.06%, up about 3 basis points intraday, accumulating an increase of about 22 basis points this week after a slight increase last week.
Trends in US Treasury Yields by Maturity this Week
The yield on 2-year US Treasury bonds, which is more sensitive to interest rate prospects, was above 5.01% before the release of non-farm payroll data. After the data was released, it quickly retraced its gains and briefly fell below 4.86%, declining by more than 20 basis points from the high of 5.12% reached on Thursday, which was the highest level since June 2007. It then almost erased the decline. Earlier, it tested 5.0% before the US stock market opened. The decline widened during the early trading session but narrowed during the midday trading session. At the end of the bond market session, it was around 4.95%, down about 3 basis points intraday. It has risen by about 5 basis points this week, with a much smaller increase in yield compared to the 10-year Treasury bonds. The two-year US Treasury yield hit a new intraday high on Thursday, the highest since 2007, before falling back.
After the non-farm payroll data, the US dollar index accelerated its decline, reaching a two-week low, while the Japanese yen reached a two-week high. Offshore renminbi briefly rebounded by 400 points.
The ICE US Dollar Index (DXY), which tracks the exchange rates of the US dollar against six major currencies including the euro, was mostly on a downward trend on Friday. During the early Asian session, it briefly rose to near 103.20, refreshing the daily high. However, it quickly fell below 103.00 after the non-farm payroll data was released, with the decline rapidly expanding. After the US stock market fell below 102.30, it hit a new intraday low since June 22, falling more than 0.9% during the day, a decrease of about 1.3% compared to the high of around 103.60 reached on June 13, which was close to the high of last week.
By the close of the US stock market on Friday, the US dollar index was below 102.30, down nearly 0.9% during the day. After three consecutive days of gains, it has fallen for two consecutive days this week, with a decline of more than 0.6%. The Bloomberg Dollar Spot Index, which tracks the US dollar against ten other currencies, fell nearly 0.7% and returned to a low since June 22 after two consecutive days of gains. It has fallen 0.5% this week, erasing the gains from last week, just like the US dollar index.
After the release of the non-farm payroll report, the Bloomberg Dollar Spot Index accelerated its decline and fell to a two-week low.
Among non-US currencies, the Japanese yen rose for two consecutive days and reached a two-week high after hitting a one-week high on Thursday. The US dollar against the Japanese yen quickly fell below 143.00 after the US non-farm payroll report was released, and the US stock market once fell below 142.10, hitting a low since June 22. It fell nearly 1.4% during the day, a decrease of more than 2% compared to the high of over 145.00 reached last Friday, which was the highest since November last year.
In the Asian session, the offshore renminbi (CNH) against the US dollar hit a daily low of 7.2647, rebounded during the Asian session, maintained its upward trend during the European and American trading sessions, and hit a daily high of 7.2248 in the early US stock market, rising by 308 points during the day and rebounding by 399 points from the daily low. At 4:59 am Beijing time on July 8, the offshore renminbi against the US dollar was reported at 7.2324 yuan, up 232 points from the New York closing on Thursday. After three consecutive days of gains, it has risen for two consecutive days, with a cumulative increase of 353 points this week, reversing the two-week downward trend.
Bitcoin (BTC) fell below $29,800 during the Asian session, hitting a low since last Friday, June 30. It then rebounded and briefly rose above $30,400 during the US stock market session, rising more than $700 and more than 2% from the daily low. It closed above $30,200 in the US stock market, with a slight cumulative decline in the past 24 hours and a decline of about 0.2% in the past seven days.
Crude Oil Hits Two-Month High, Largest Weekly Gain in Three Months
International crude oil futures fell slightly before the opening of the US stock market, but then turned higher and continued to rise. At midday, US WTI crude oil rose to $73.92, up nearly 3% for the day, while Brent crude oil rose to $78.54, up 2.6% for the day.
In the end, WTI August crude oil futures closed up 2.87% at $73.86 per barrel, reaching a new closing high since May 24. Brent September crude oil futures closed up 2.55% at $78.47 per barrel, marking the largest increase since June 15 and a new closing high since May 1.
US oil rose about 4.6% this week, while Brent oil rose about 4.1%, both recording their first weekly gain of over 4% since April 6, the largest weekly gain since April 6, and a two-week consecutive increase.
US gasoline and natural gas futures continued to fluctuate. NYMEX August gasoline futures closed up 1.8% at $2.5893 per gallon, reaching a high since June 21, with a three-day consecutive increase and a 1.7% gain for the week, marking a two-week consecutive increase. NYMEX August natural gas futures closed down 1.03% at $2.5820 per million British thermal units, hitting a low since June 20 for the second consecutive day, with a 7.7% decline for the week, the largest weekly decline since May 26, and a two-week consecutive decline.
London Copper Reverses Three-Day Decline, London Tin Falls but Records Nearly 6% Weekly Gain, Gold Sees Largest Daily Increase in a Month, Ending Three Weeks of Decline
London base metal futures showed mixed performance on Friday. Leading the gains, London copper rose over 1%, rebounding above the 8300 US dollar mark after three consecutive days of decline and closing below this level for the first time in a week. London aluminum and London lead rebounded after two days of decline, with London aluminum reaching a new high since late September last year and London lead temporarily departing from a one-month low.
However, London nickel and London tin halted their two-day gains, with London nickel falling nearly 2% and dropping from its high point in nearly two weeks, and London tin falling nearly 0.7%. Although it bid farewell to its five-month high, it managed to hold above the $28,000 mark, which it surpassed with a more than 3% increase on Thursday. London zinc, which rebounded on Thursday, fell slightly and failed to approach the high point set more than a week ago.
Base metals had mixed performance this week. London tin, which rose alone last week, increased by about 5.8% and showed the best performance for two consecutive weeks. London nickel, which had been the biggest decliner for two consecutive weeks, rose over 1%, while London copper rose nearly 0.7%, both ending their two-week decline. London lead fell over 2%, London zinc fell over 1%, and London aluminum fell nearly 0.3%, all recording a three-week consecutive decline.
New York gold futures rebounded on Friday, accelerating their rise after the release of the US non-farm payroll report, with the morning session reaching a high of $1941.1, up more than 1.3% for the day. Finally, COMEX gold futures for August closed up 0.89%, marking the largest daily gain since June 8th, and settled at $1932.50 per ounce, breaking away from the closing low since March 14th, which was refreshed on Thursday. Gold has accumulated a 0.16% increase during this period, putting an end to the three-week decline.
