US ISM Manufacturing data hints at peak cycle

After what was shaping as a strong start to the week for global equities, US ISM Manufacturing PMI data took the wind out of the sails of Wall Street overnight. The survey revealed manufacturing activity expanded by less than expected last month, with the headline figure coming in at 59.5, down from 60.8 in the month prior. Though undoubtably a strong number, and indicative of a solid economy, the progress trend lower in the indicator seems to suggest the US economy’s cycle has passed its peak.

Reserve Bank of Australia (RBA) disappoints the market by keeping policy unchanged

The RBA met this afternoon and disappointed market participants after opting to reverse last month’s decision to taper its QE program. Despite the potential economic risks stemming from recent Covid-19 lockdowns in Australia, the RBA opted to stick to its timeline of reducing its bond purchases from $5 billion per week, to $4 billion per week. Naturally, the AUD/USD surged following the decision as Aussie bond yields jumped, with the pair pushing above 74 cents in the hours following the decision.

Afterpay shares extend rally

The good times have kept rolling for Afterpay Holdings Limited shareholders today, as investors continue to digest the impacts of the company’s acquisition by US payments firm Square Inc. Shares jumped by over 12% today, after Square shares rallied overnight following it released quarterly earnings. The fortune for Afterpay shares will be closely tied to that of Squares from now on, with the takeover of Afterpay being effectively paid for by a proportion of Square shares.

Tencent shares tumble on China regulatory risk

Tencent Holdings Ltd shares have taken a tumble, as Chinese authorities seem to turn their crusade on the private sector to the gaming industry. The company’s shares plummeted as much as 10% during Chinese trade, after state media labelled online gaming as “spiritual opium”. The move is only the latest in several by the Chinese government against its public companies, with reports also swirling around today the country’s market regulator is also launching an investigation into its auto chip distributors.

ASX200

After surging to fresh record highs yesterday, the Australia 200 has shed a little bit of ground today, in what’s been a far less heady session for the market. In mid-afternoon trade, the index has found itself down by 0.4%, weighed down by energy and materials stocks. The IT sector has proven the outperformer for the second day straight, thanks of course to the surging share price of Afterpay.
 

Kyle Rodda | Market Analyst, Australia | Publication date: Tuesday 03 August 2021 16:33