Dow drops 390 points and slips back below 26,000 as bond yields decline; European stocks close lower amid trade war worries; Tullow Oil up 20%
Stocks fell on Monday as bond yields resumed their August downturn, raising concerns about the state of the economy. The benchmark 10-year Treasury yield, which fell to its lowest since 2016 last week, dipped to 1.63%. The spread between 2-year and 10-year Treasury yields narrowed to only 6 basis points on Monday, near its lowest level since 2007.
Dow Jones Industrial Average fell 391 points, or 1.49%, to 25,896.44, while the S&P 500 dropped 36.21 points, or 1.24%, to 2,882.44 and the Nasdaq Composite is down 1.2% to 7,863.41. It was the second down day in a row for the market, which had staged a remarkable recovery last week until the selling returned again on Friday.
European stocks closed lower on Monday as investors monitored escalations in the U.S.-China trade war.The pan-European Stoxx 600 closed provisionally down nearly 0.3%. The index had posted an almost 1% gain earlier in the session. Banks were the biggest fallers, led by a 5% slide for CYBG, while chemicals stocks were the best performers.
In corporate news, Apple supplier AMS said Sunday that it has made an all-cash takeover offer of 38.5 euros ($43.15) per share for German lighting group Osram Licht. AMS stock plunged almost 12% while Osram shares leaped over 10% on the news.
Meanwhile, Tullow Oil shares surged 20% to lead the Stoxx 600 after it announced a major oil discovery in Guyana.
NBS: FX reserves at EUR 12.7bn in July
Gross and net NBS FX reserves continued to increase and at end-July 2019 reached a new end-of-month maximum since 2000, i.e. since the data have been tracked in this manner. Gross NBS FX reserves stood at EUR 12,758.4 mn at end-July, up by EUR 612.4 mn from June. During the last year (relative to end-July 2018) gross FX reserves increased by EUR 1,355 mn (largely on account of NBS interventions in the domestic FX market in the form of net FX purchases – by EUR 1,735 mn, which is the healthiest way to boost reserves). This took place in the very period when the government net repaid EUR 1,851.5 mn under FX loans and securities.
NBS: Annual inflation in July at 1.6%
According to the data of the Serbian Statistical Office, consumer prices fell by 0.2% in July. The monthly drop was aided primarily by the seasonal decline in the prices of vegetables, clothes and footwear, and lower petroleum product prices. The major counter influence was exerted by the seasonally higher prices of travel packages and cigarette price adjustments. Annual inflation continued to move within the target tolerance band (3±1.5%) and measured 1.6% in July. Core inflation (CPI excluding food, energy, alcohol and cigarettes) stayed broadly flat compared to the previous several months – at 1.5% y-o-y in July.
EUR 12 billion for investment plan, investments to be made in utility, transport, energy digital infrastructure and tourism
Serbian President Aleksandar Vucic has presented the structure of the investment plan for the upcoming period, for which, he says, 10 to 12 billion euros will be set aside and invested in utility, transport, energy, digital infrastructure, as well as in promoting increased birthrate, housing for the young, but also tourism. The Office for Public Investments will continue working on hospitals and clinics, Vucic said. It is our intention to have sewer projects carried out throughout Serbia, including water treatment facilities, as well as water supply systems, and we are thinking about putting EUR 3 billion in that – the president said.