Major stock indices all ended the week lower on concerns about China’s chip technology advancements and slower PMI and manufacturing data. A Chinese telecom firm announced a new mobile phone with a 7nm processor, exceeding expectations for their technical capability. Also, the Chinese government banned Apple iPhones for government use. This caused a selloff in semiconductors and Apple stock.
The Bank of Canada met and chose to keep its main interest rate at 5.0%. While the bank cited some evidence of a slowdown it was still concerned about price pressures and stated it may increase rates further if needed in the future.
Treasury bond yields were rose with the 30-year bond yield at 4.333% and the 10-Year note at 4.262%. Freddie Mac reported that the average 30-year mortgage rate fell to 7.12%. Crude oil rose to $87.30 a barrel and natural gas fell to $2.609 per MMBTUs. The U.S. dollar index rose to 105.06 and gold fell to $1942.70 an ounce.
- Canada reported it added 40,000 jobs in August, double expectations. The unemployment remained at 5.5%.
- S&P Global released its purchasing manager’s indices for August. Keep in mind that anything over 50 represents expansion and everything under 50 represents contraction.
- U.S. manufacturing PMI fell from 49.0 to 47.9.
- U.S. services PMI fell from 52.3 to 50.5.
- China manufacturing PMI rose from 49.2 to 51.0.
- China services PMI fell from 54.1 to 51.8.
- Japan manufacturing PMI was unchanged at 49.6.
- Japan services PMI rose from 53.8 to 54.3.
- Eurozone manufacturing PMI rose from 42.7 to 45.3.
- Eurozone composite PMI fell from 48.6 to 46.7.
- The Commerce Department
- New orders for manufactured goods fell 2.1% in August following a 2.3% gain in July.
- New orders for manufactured goods fell 2.1% in August following a 2.3% gain in July.
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- The U.S. trade deficit rose 2.0% July as both imports and exports rose.
- The U.S. trade deficit rose 2.0% July as both imports and exports rose.
- The Labor Department reported:
- 2nd quarter productivity was revised from a 3.4% gain to a 3.5% gain.
- 2nd quarter unit labor costs were revised from a 1.9% gain to a 2.2% gain.
- Seasonally adjusted first-time claims for unemployment were 216,000, a decrease of 13,000 from the previous week’s revised level of 229,000.
- The 4-week moving average of claims, designed to smooth out volatility, were 229,250 an increase of 8500 from the previous week’s revised level.
- For the full unemployment report go here: https://www.dol.gov/ui/data.pdf .
- The EIA weekly oil report is here: http://ir.eia.gov/wpsr/wpsrsummary.pdf . Also, the EIA reported in the prior week:
- Field production of crude oil was unchanged at 12.8MM BPD.
- Natural gas storage rose 33BN cubic feet and is above the 5-year average at this time of year.
- Baker Hughes reported the number of active oil rigs rose to 513. The number of active natural gas was fell 1 to 113.
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Loren C. Rex, CFP®, MA Erik A Smith, AIF®
Founder / Emeritus President & C.E.O.
These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly.
Sources:
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W
https://ir.eia.gov/ngs/ngs.html
https://www.freddiemac.com/pmms
https://www.wsj.com/market-data?mod=nav_top_subsection
https://bakerhughesrigcount.gcs-web.com/na-rig-count
https://www.census.gov/economic-indicators
