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Daily summary: US stocks gave up early gains. Oil under selling pressure

19:01 2 August 2021
  • European equities started August in upbeat moods
  • US Senate agrees infrastructure bill draft
  • US ISM manufacturing data came out weaker than expected
  • WTI crude fell more than 4%

European indices finished the first session of the month higher amid solid corporate earnings and economic data. HSBC Holdings first-half pre-tax profit more than doubled from last year when it set aside $7 billion (€5.9 billion) to cover pandemic-related bad loans. Company also said it would pay an interim dividend. Heineken posted solid quarterly figures but warned costs could eat into margins, a sign of rising inflationary pressures. On the data front Germany's retail sales topped analysts' projections while Europe's manufacturing growth remained near the recent high. 

US indices launched the session in upbeat moods with the Dow Jones hitting a fresh intraday high and the S&P 500 approaching record levels as US senators finalized details on Sunday of a sweeping $1-trillion plan to invest in roads, bridges, ports, high-speed internet and other infrastructure. Senate Majority Leader Chuck Schumer is pushing for the bill to be passed before the chamber goes on recess on Aug. 9. However, moods worsened slightly after the publication of the ISM manufacturing report which pointed to the second consecutive month of slowing factory growth.

WTI crude fell more than 4.0% and is trading slightly above $71.00 a barrel, while Brent is trading 3.40% lower around $73.80 a barrel partially due to concerns over a slowdown in China’s economy, which is the second-largest oil consumer in the world. A private survey showed factory activity in China fell sharply last month, as demand contracted for the first time in more than a year. Also according to Reuters report oil output from OPEC rose in July to its highest since April 2020. Elsewhere gold rose 0.18% and is trading slightly above $ 1,816.00 / oz, while silver is trading 0.15 % higher, around $ 24.90 / oz. Friday's NFP report will be in the spotlight this week. Disappointing figures could support bets the Fed won't taper anytime soon, which could move gold prices higher.

USDJPY pair has been moving inside a descending channel recently and today reached major support at 109.20 which is marked by previous price reactions. Should the break lower occur, then downward move may accelerate towards next support at 108.40. On the other hand, if buyers manage to halt declines here, then the nearest key resistance to watch lies at 110.00 and is strengthened by 50 SMA (green line). Source: xStation5

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