Equities were lower at the beginning of trading as investors continued to digest the stronger than expected employment report.
At the time of market opening, the S & P 500 (^ GSPC) was 13.60 points or 0.45% lower, the Dow (^ DJI) fell 132 points or 0.49%. The Nasdaq (^ IXIC) fell 55 points or 0.67%.
Meanwhile, gold (GC = F) rose 0.19%, bringing the precious metal to US $ 1,402.70 an ounce as investors were safe. Crude oil (CL = F) rose 0.30% to $ 57.68 a barrel.
Following a record high last week, equities pulled back from this level as investors began to fear that the likelihood of a rate cut in July after the IPO had dropped significantly. Now investors will focus their attention on a few upcoming events – Powell's statement this week and second-quarter earnings. The highlight of the week will be on Wednesday when Federal Reserve Chairman Jerome Powell launches to Capitol Hill for a two-day testimony before Congress.
Powell will present its biannual monetary policy report. Market participants will closely monitor their language in order to gain some indication of what the monetary policy of the central bank will look like in the future.
Some strategists are believes that given the current economic and geopolitical landscape, equities have limited scope for the current trading portfolio. Morgan Stanley strategist Andrew Sheets downgraded his global equity allocation from Equal to Underweight, stating that he believes his price targets for the S & P 500, the MSCI Europe, the MSCI EM and, over the next 12 months, only will exceed about 1% Topix Japan.
Sheets warned that even if the Federal Reserve loosens monetary policy, the benefits are offset by weaker growth. "We believe that a repeated lesson for equities over the past 30 years has been that if a simpler policy collides with weaker growth, the latter is usually more important to returns. Relaxation has worked best when accompanied by an improvement in data.
According to Sheets, the second quarter result will be an important catalyst for the markets. "We believe that the market undervalus the risk that companies lower their full-year guidance. Just think about how much has changed since the first quarter in mid-April, "Sheets said. Since the end of the last winning season, the trade war between the US and China has worsened, global economic data has weakened and sentiment has slowed. "We believe that all these signals represent a risk to equities."
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STOCK EXCHANGE: Boeing loses 737 MAX customers, Deutsche Bank cuts jobs
Dow component Boeing shares (BA) fell more than 1% on Monday after the Saudi Arabian airman lost an order for nearly 6 billion US dollars against Airbus. Flydeal is now buying 30 Airbus A320neo jets. Boeing did not manage to blow up its 737 MAX aircraft after two deadly crashes killed hundreds of people due to a software issue. The company is still working with the regulators on a software fix before the grounded jets can fly back to the sky. Investors fear that Boeing's order books will eventually suffer a blow as the 737 MAX jets stay on the ground longer.
Another Dow component, Apple (AAPL), is under pressure after Rosenblatt Securities downgraded the stock from neutral to sell. Although analyst Jun Zhang maintained his target of $ 150, he warned that iPhone sales will be weak and iPad sales will plummet in the second half of the year. According to Zhang, sales of other products are not enough to increase sales. Stocks fell 1.5% in early trading.
Deutsche Bank (DB) shares fell more than 6% on the early trading day after the bank officially started to cut 18,000 jobs, which is about one-fifth of the workforce. The bank will spend around $ 8.3 billion to radically reshape its business. Deutsche Bank plans to downsize its investment bank and cut total costs by a quarter by 2022. "Today we have announced the most fundamental transformation of Deutsche Bank for decades," said CEO Christian Sewing in a statement on Sunday. "We are tackling what is needed to unleash our true potential."