While you were sleeping: US manufacturing shows strength

Tuesday 4th July 2017

The US dollar gained on better-than-expected manufacturing data, while Wall Street was mixed as bank stocks climbed and tech stocks slid.

US financial markets closed early on Monday and will remain closed on Tuesday for the July 4 holiday.

An Institute for Supply Management report showed its index of US national factory activity climbed to a reading of 57.8 in June, its highest since August 2014 and up from 54.9 in May.

"The ISM index provides further evidence that the prospects for the manufacturing sector remain bright," Andrew Hunter, an economist at Capital Economics, told Reuters.

Indeed, said Timothy Fiore, chairman of the ISM factory survey committee.

“Everything was strong,” Fiore said on a conference call, Bloomberg reported. Unless supply-chain constraints arise, “there’s really no reason” why the robust pace of manufacturing can’t continue, he said.

Investors will scrutinise minutes from the US Federal Reserve’s June meeting, scheduled for release on Wednesday, for further clues on the outlook for inflation and interest rate increases. On Friday, the Fed will also release its monetary policy report to Congress.

And it’s a key week for the latest US jobs data. A Labour Department report, also due Friday, will show US employers added about 175,000 workers in June while wage growth strengthened, according to a Bloomberg poll of economists.

In New York, the Dow Jones Industrial Average rose 0.6 percent, while the Standard & Poor’s 500 Index added 0.2 percent. Earlier in the session the Dow touched an intraday record high of 21,562.75 before giving up some of its gains later in the day.

However, the Nasdaq Composite Index slid 0.5 percent.

In the Dow, gains in shares of Goldman Sachs and those of JPMorgan Chase, up 2.4 percent and 2 percent respectively, outweighed declines in shares of Microsoft and those of Intel, down 1.1 percent and 0.8 percent respectively.

US Treasuries declined, pushing the yield on the 10-year note four basis points higher to 2.33 percent.

In Europe, the Stoxx 600 Index ended the day with a 1.1 percent advance from the previous close. The UK’s FTSE 100 Index gained 0.9 percent, Germany’s DAX Index gained 1.2 percent, while France’s CAC40 Index rallied 1.5 percent.

Shares of France’s Danone closed 1.3 percent higher in Paris after the company agreed to sell its US dairy business, Stonyfield, to Lactalis for US$875 million, as part of an agreement with the US Department of Justice to address competitions concerns as Danone seeks approval for its acquisition of WhiteWave.

The closing of the divestiture is subject to customary conditions, including final approval by the DOJ, and is expected in the third quarter of this year, Danone said in a statement.

(BusinessDesk)

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