ISM Services Calm Financial Markets, Showing Stability in the Sector

The US ISM services data for July, which showed that the sector is in robust condition, helped the markets recover after a particularly pessimistic start today. Following the worst day for the Japanese stock market in nearly forty years, US traders stepped in to stabilize the market as investors grappled with the unwinding of the carry trade and rapid deleveraging in an uncertain economic climate.

Some US economic indicators revealed a stable services sector in contrast to the struggling manufacturing sector, contributing to today’s market recovery. Adding to the calm, the Fed’s Goolsbee projected confidence and steady motion by the FED. However the selloff in stock markets has resumed in late US trading, but Gold and the safe haven currencies are not moving much.

US ISM Services Report for July

Ten out of eighteen industries in this sector experienced growth last month, with arts and entertainment, along with lodging and food services, showing the strongest performance. This indicates that customers are paying for leisure as well, however it is summer time. Feedback from businesses indicated a cautious yet steady corporate environment, with some concerns about inflation and the upcoming election. Last month, it seemed like this index might decline, but it may have performed a deceptive turnaround. The Federal Reserve is likely to interpret this as evidence supporting its “soft landing” narrative and will continue to resist aggressive rate-cutting pressures.