DJIA reaches record intraday high on manufacturing data

Wednesday, July 02, 2014

Encouraging US factory activity spurred Wall Street higher yesterday as the bullish tone was reinforced with firm buying from the outset after last week’s consolidation. Markets were buoyed by stable Markit PMI and ISM manufacturing data, both of which only just missed expectations of 57.5 and 55.9, coming in at 57.3 and 55.3 respectively. Despite falling short of expectations, steady improvement in economic conditions since the start of the year has seen the ISM manufacturing index recover from January’s low of 51.3 while the Markit manufacturing PMI rose to a year-to-date high, surpassing the 57.1 reading seen in February. The DJIA pushed to a record intraday high as it found firm support towards 17,000 towards the afternoon, climbing to 16,998.70 before eventually closing at 16,956.07 and registering gains of 0.77% throughout the session. The S&P 500 also rallied higher, adding 0.67% throughout the day on renewed optimism.

The Asian session carried over the positive sentiment from US markets with benchmark indices across the region gaining on encouraging macro data from the US, building upon the strong start to the week after China’s official manufacturing PMI reading confirmed further expansion in factory output throughout June. However, the housing market remains a significant risk to recovery and recent home price data shows a further slump in prices throughout May. Property developers in Hangzhou and Wenzhou which are two of the weakest markets according to official data have offered to purchase homes back off buyers above the initial purchase price to boost demand.

Spot gold prices held firm just above $1,325/oz yesterday, pulling back from a three month high as the recent rally in prices pared physical demand. Prices declined throughout May as optimistic investors hopeful for a rebound in the US economy dumped SPDR holdings, with spot prices dropping below $1,250/oz for the first time since early February. The yellow metal has since rallied 7.2% throughout June on renewed buying appetite but activity yesterday and this morning has seen levels hold firm around $1,325/oz ahead of Yellen’s speech at the IMF later today.

DJIA pushes to record intraday high...

DJI Index Dow Jones Industrial 2014 07 02 07 35 34

...as US manufacturing activity continues to expand

NAPMPMI Index ISM Manufacturing 2014 07 02 07 40 32

Gold prices gain support around $1,325/oz ahead of Yellen's speech

GDTRGOLD Index SPDR Gold Trust 2014 07 02 07 59 09



Events for today

0700

UK

Jun

Nationwide House Prices

0800

UK

Jun

Halifax House Prices

1000

EZ

May

Producer Prices

1230

US

Jun

Layoffs

1315

US

Jun

ADP National Employment

1500

US

May

Durable Goods

1500

US

May

Factory Orders

1530

US

w/e

EIA Energy Stocks

OE: 

Jul  Gasoil (ICE)

 

 

Topics: Equities, Gold, PMI
More from: Kash Kamal