The US non-manufacturing Index from the Institute of Supply Management was released yesterday and reporteda progressive growth of the U.S. service industries. A reading of 52.2 for the month of June was increased to a 56 rating for this month, surpassing the 53.1 expected reading. A reading below 50 indicates an economy in contraction, while an above 50 reading indicates an economy in expansion.
These positive reports only heightened speculations that the US Federal reserve will soon be reducing its $85 billion a month economic stimulus program. One of the policy makers, Fed Member Richard Fisher, warned investors not to rely on the monthly bond-buying Quantitative Easing (QE) program, which fueled more guesswork from investors that the monetary policy will be reduced in September or in October. As a result, major global markets had mixed sentiments, which helped stocks to be pushed lower, along with Asian stocks that were sent plunging for the second consecutive day.
U.S. stocks started today with mixed trading, with the European stock markets following suit, as investors articulated their uncertainty about the Federal Reserve bond buying program. This has created opportunities in financial stocks with binary options today. Over in Europe, French lenders BNP Paribas increased by 0.20%, while Barclays and HSBC Holdings were both trading lower by 0.49% and 0.69% respectively.
Japan’s Nikkei 225 declined 0.47%, recovering from an earlier 1.5% downturn as the JPY traded higher against the USD. Japanese stocks were lower as entertainment giant Sony fell nearly 6% after it refused plans to divide the company to create shareholder value.
The Chinese Shanghai Composite fell by 0.64% which resulted from a poor earnings report from global banking giant HSBC, while Hong Kong’s Hang Seng Index lost 1.65%.
Meanwhile down under, the Australian Bureau of Statistics reported that the Australia’s home price index increased 2.40% for the second quarter; however, it had Australia’s S&P/ASX 200 dropping by 0.24%.
The Dow Jones Industrial Average suffered losses by as much as 100 points as investors become wary of future plans for the stimulus policy program of the US Federal Reserve. At the moment, the economy is showing signs of recovery and may continue its bullish streak.
There’s not much movement seen on the S&P 500 during yesterday’s trading session. However, there was a downward momentum felt today. As traders continue to worry about the tapering of the monetary policy as early as next month, the S&P 500 has fallen below the 1700 level. Despite this, market speculators believe that it will continue an upward trend as a prevailing bullish behavior is seen in the market for the past few weeks.
The Japanese Yen showed a weak performance against most of the currencies this trading week. The USD/JPY pair was seen dropping to the 98.00 level. In the Asian session, the currency duo was pulled up as a reaction to the Japanese Leading Indicators that had a worse-than-expected 107% rating, rather than the expected 108%.
With the release of the US Non-Manufacturing data, USD markets showed mixed trading in anticipation of the Fed’s next move. There was little movement in the EUR/USD which saw an increase of 0.04%. Similarly, the GBP/USD currency pair was down by 0.04% and the Aussie was trading a little higher than the USD by 0.32%.