Market Insights 5/8/2019

In what looked to be a modest rebound following yesterday’s sharp declines that came courtesy of increased U.S.-China trade tensions, U.S. equities lost steam in the final minutes to finish mixed.

Treasury yields finished higher amid a light economic calendar that showed that mortgage applications broke a four-week losing streak.

The U.S. dollar was nearly unchanged, gold was lower and crude oil prices were higher.

The Markets…

The Dow Jones Industrial Average rose 2 points to 25,967

The S&P 500 Index lost 5 points (0.2%) to 2,879

The Nasdaq Composite decreased 20 points (0.3%) to 7,943

In moderate volume, 814 million shares were traded on the NYSE and 2.1 billion shares changed hands on the Nasdaq

WTI crude oil gained $0.72 to $62.12 per barrel and wholesale gasoline was up $0.03 at $1.98 per gallon

The Bloomberg gold spot price decreased $3.48 to $1,280.95 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was unchanged at 97.62

Mortgage applications snap string of weekly declines

The MBA Mortgage Application Index rose 2.7% last week, following the prior week’s 4.3% decline. This snapped a string of four-straight weekly decreases as a 0.8% rise in the Refinance Index was met with a 4.2% gain for the Purchase Index. The average 30-year mortgage rate dipped 1 basis point to 4.41%.

Treasuries were lower, as the yield on the 2-year note rose 2 bps to 2.30%, while the yields on the 10-year note and the 30-year bond increased 3 bps to 2.48% and 2.89%, respectively.

The first look at the April inflation landscape will come tomorrow, courtesy of the Producer Price Index (PPI), with economists projecting a 0.3% month-over-month m/m increase, while the core rate, which excludes food and energy, is estimated to have risen 0.2% m/m. Weekly initial jobless claims are also slated for release, forecasted to have declined 10,000 to 220,000, and the trade balance will round out the docket, anticipated to show the deficit widened slightly during March to $50.1 billion from the $49.4 billion registered in February.

Europe mixed amid trade worries and German data, Asia lower after yesterday’s U.S. slide

European equities finished mixed, with the global markets remaining hampered by resurfaced U.S.-China trade worries as talks are set to resume this week and the U.S. has threatened to increase tariffs on Chinese goods by Friday. German earnings and economic data was in focus and mostly positive, with the nation posting an unexpected month-over-month rise in industrial production.

The euro and the British pound lost ground versus the U.S. dollar, while bond yields in the region were mostly lower.

Stocks in Asia finished broadly lower, with the global markets falling yesterday amid escalated trade tensions as the U.S. and China are set to resume talks this week amid the backdrop of the former threatening to increase tariffs on the latter’s goods on Friday.

Mainland Chinese securities and those traded in Hong Kong were lower, with the markets also digesting a mixed Chinese trade report for April, which showed exports were below expectations but imports came in stronger than anticipated. Stocks in Japan fell sharply, with the yen gaining ground, while markets in Australia, South Korea and India all traded to the downside.