(News Bulletin 247) – The correction prevails but Wall Street does not end at the bottom: losses exceeded -1.5% on the Nasdaq, it ends at -1.05%.
The Dow Jones lost 0.57% (as at the start of the session), the S&P500 index dropped 0.70% (against -1.2% around 7 p.m.): there are still buyers, it remains to be seen these are ‘conviction’ purchases or if underinvested managers who have missed the artificial intelligence ‘bull-run’ do not complete their portfolios late in life by taking advantage of the first somewhat marked dip that is present.
Because clouds are gathering on the horizon: oil has now recovered more than 10% in 2 weeks and +30% since mid-June.
This is quite counter-intuitive in the context of a slowdown in industrial activity on a global scale, and particularly in China.
Beijing, which is struggling to prevent the bankruptcy of Chinese promoters in debt between $100 and $300 billion, is unable to stimulate its economy to the extent that investors had hoped for.
Beijing is concentrating on targeted, rather ‘technical’ measures and no longer on a major recovery plan based on giant infrastructure projects.
And above all, the weakness of the demography – which does not prevent youth unemployment – is weighing on consumption, which has not taken off with a bang, as most of the strategists who have recommended betting fully on the luxury sector.
The rise in margins of Hermès and LVMH have obscured this fundamental problem: the Chinese locomotive is no longer powerful enough to pull the wagons of emerging economies.
And as if that weren’t enough, after Huawei was banned over US ‘digital security’ concerns, China has decided to give back to the Biden administration: Beijing bans employees of government agencies the professional use of iPhone, and much more serious, the owners of iPhone have prohibition to take it on their place of work.
Sales of the future iPhone-15 are not looking good in the Middle Kingdom.
In order not to appear as vindictive as the US vis-Ã -vis Huawei, Beijing’s directive would also concern a number of non-Chinese phone models (whose sales are in fact confidential).
The Nasdaq could not resist the -3.6% fall of Apple ($100 billion in ‘capi’ lost in a few hours) or Nvidia (-3.1%) which could be banned from exporting certain ‘high performance’ components to China (the rumor is not new, but the showdown between the US and China could accelerate.
Also note the declines of 2 other heavyweights: Amazon (-1.4%) and Alphabet (-1%).
On the bond side, it’s not brilliant: interest rate pressure continues, in the wake of oil (which is flirting with $87 on the NYMEX).
US T-Bonds continue to deteriorate: the ’10-year’ returns to the 4.300% mark with +3.5 basis points at 4.3030%.
The US figures of the day were mixed, even a little contradictory: growth in the tertiary (‘services’) sector accelerated in the United States in August (+1.8 to 54.5), according to the latest survey by the Institute for Supply Management (ISM) carried out among purchasing managers, while economists were forecasting an index down slightly to around 52.5.
All sub-sectors of the index rose, starting with those measuring employment (+4 points) and new orders (+2.5 points), confirming the resilience of US growth.
Another good surprise, that measuring deliveries by suppliers improved by 0.4 points, to 48.5 against 48.1 the previous month.
The picture turns out to be less cheerful on the side of the private sector of the United States which saw its growth decelerate a little more than initially estimated in August (-1.8Pt): the composite PMI index of S&P Global finally established at 50.2 for the past month, against 50.4 in flash estimate and after 52.0 for July.
‘The slowdown in private sector growth – to its lowest pace since February – stemmed from weaker service sector expansion and a renewed contraction in manufacturing output,’ the investigators said.
In other words, one institute (ISM) highlights the strength of ‘services’, so S&P-Global sees the tertiary sector slowing down to its lowest level in 6 months.
Copyright (c) 2023 News Bulletin 247. All rights reserved.
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
