Asia Morning August 12

Asia Morning: Dow, S&P End 7-Day Rally

On Tuesday, U.S. stocks ended in negative territory. The Dow Jones Industrial Average slid 104 points (-0.38%) to 27686 and the S&P 500 dropped 26 points (-0.80%) to 3333. Both indexes halted a seven-session rally. The Nasdaq 100 fell 209 points (-1.89%) to 10876 posting a three-day decline.

S&P 500 Index: Daily Chart

Source: GAIN Capital, TradingView

Investors were concerned after Senate Republican leader Mitch McConnell said there was no progress on talks for a COVID-19 relief package.

Technology Hardware & Equipment (-2.45%), Utilities (-2.13%) and Real Estate (-1.87%) sectors led the market lower. Newmont Mining (NEM -7.39%), Occidental Petroleum (OXY -8.01%) and Advanced Micro Devices (AMD -6.52%) lost the most.

Meanwhile, Wynn Resorts (WYNN +8.36%), Las Vegas Sands (LVS +7.32%), TripAdvisor (TRIP +4.53%) and Expedia (EXPE +3.78%) posted gains.

Regarding U.S. economic data, Producer Prices increased 0.6% on month in July (+0.3% expected, -0.2% in June).

European stocks were broadly higher. The Stoxx Europe 600 Index jumped 1.68%, Germany's DAX 30 surged 2.04%, France's CAC 40 climbed 2.41% and the U.K.'s FTSE 100 was up 1.71%.

U.S. government bond prices remained under pressure, as the benchmark 10-year Treasury yield jumped to 0.657% from 0.571% Monday.

Precious metals were sold hard as investors turned optimistic that a coronavirus vaccine would come soon. Spot gold price nose-dived $115.00 or 5.70% to $1,911 an ounce, the biggest daily dollar slide in over seven years. Spot silver price plummeted 14.84% to $24.80 an ounce.

U.S. WTI crude oil futures (September) declined 0.8% to $41.61 a barrel.

On the forex front, the ICE U.S. Dollar Index marked a day-low of 93.18 before bouncing back to 93.64, broadly unchanged from the prior session.

EUR/USD was little changed at 1.1737. The German ZEW Current Situation Index fell to -81.3 in August (-69.5 expected) from -80.9 in July while Expectations Index climbed to 71.5 (55.8 expected) from 59.3. The eurozone's industrial production for June will reported later in the day (+10.0% on month expected).

GBP/USD slipped 0.2% to 1.3051. Official data showed that U.K. jobless rate was steady at 3.9% in the April-June period (4.2% expected). Later today, second quarter GDP (-22.3% on year expected) and June industrial production (+9.0% on month expected) will be released.

USD/JPY advanced 0.5% to 106.53.

USD/CAD lost 0.3% to 1.3308. Government data showed that Canada's housing starts rose to an annualized rate of 245,600 units in July (205,000 units expected) from 212,100 units in June.

Meanwhile, NZD/USD was down 0.4% to 0.6564. The Reserve Bank of New Zealand is expected to keep its benchmark rate at 0.25% unchanged later today.

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