- Tech stocks sell off in Asia and US while Europe outperforms
- Bitcoin rebounds
- Yields recover
Key Events
Global markets offered up a murky trading picture on Wednesday, with US futures on the, S&P, NASDAQ and Russell 2000 all marginally higher while contracts on the Dow edged lower due to conflicting investor sentiment. Traders are waiting for today's Fed interest rate decision and statement as well as earnings releases from tech megacaps, after yesterday'mixed earnings results.
Oil edged higher; gold slipped lower.
Global Financial Affairs
China's regulatory crackdown on the tech sector has been sending Asian markets into turmoil, which has been weighing global stocks. Hong Kong, a favorite financial hub for investment in Chinese tech companies has taken the brunt of the selloff with the Hang Seng TECH Index hitting a record low.
The US tech sector is also lagging in the futures market while in Europe, gains in tech shares offset a slide in the mining sector on the STOXX 600 Index.
Yesterday, during the Wall Street session, the NASDAQ fell 1.2%, dragged down by Apple (NASDAQ:AAPL), whose management warned that slowing sales and tightening supply would impact future growth after the iPhone maker posted a record-setting third quarter. The parts shortages and a patchwork of COVID restrictions will continue to weigh on Apple’s business this year. While the company appears to be unaffected by China’s crackdown for now, it does rely on Chinese supplies, which are currently disrupted by a flood. As well, China is one of its most important markets for sales growth.
Meanwhile, the MSCI Asia Pacific Index fell to its lowest level this year, even after Chinese stocks pared losses as state media soothed viewers, on the heels of the recent selloff, which wiped out $1.5 trillion in market value. Also, the state-owned Securities Times, in a front-page commentary on Wednesday, said that systemic risks “do not exist in the A-share market overall.” Adding:
“The macroeconomy is still in a steady rebound stage, and short-term fluctuations do not change the long-term positive outlook for A-shares.”
“The recent market decline to some extent reflects misinterpretation of policies and a venting of emotion. Economic fundamentals have not changed, and the market will stabilize at any moment.”
In the US on Tuesday, equities upended the previous five-day rally, with tech megacaps, including Amazon (NASDAQ:AMZN), Facebook (NASDAQ:FB) and Microsoft (NASDAQ:MSFT), selling off ahead of corporate results.
The NASDAQ 100 registered the biggest one-day loss in over two months, as the three major benchmarks fell from record highs. The Russell 2000 fell, as well, closing 7.5% down from its Mar. 15 record.
Yields on the 10-year Treasury note trimmed losses, climbing above 1.25%, after closing below 1.24% on Tuesday.
The dollar also pared yesterday’s selloff.
USD bulls have their work cut out for them, after being rejected from a short-term rising channel, headed toward the Mar. 31 high, in an attempt at a massive double-bottom
Gold gave up gains on dollar strength but managed to hold onto a slight improvement.
The yellow metal edged higher for the second day after completing a bearish wedge.
Bitcoin climbed for the eighth-straight day, its longest winning streak this year. At time of publishing it was trading above $40K. The cryptocurrency has reached 2.2% below the June 14 high, potentially bottoming.
The digital coin briefly touched the $40,000 mark but then retreated. It has been fluctuating at that level.
Oil was back above $72 but has been unable to clear that level.
The price is stuck at the neckline of a small H&S, for the fifth straight session. Now, buyers and sellers appeared to reach equilibrium, which is often the ceasefire in a battle still ongoing.
Up Ahead
- US GDP data is due on Thursday.
- On Thursday US initial jobless claims are released.
- GDP for the Eurozone is released on Friday.
Market Moves
Stocks
- The STOXX 600 rose 0.4%
- Futures on the S&P 500 fell 0.1%
- Futures on the NASDAQ 100 fell 0.1%
- Futures on the Dow Jones Industrial Average fell 0.2%
- The MSCI Asia Pacific Index fell 0.3%
- The MSCI Emerging Markets Index rose 0.2%
Currencies
- The Dollar Spot was little changed
- The euro was little changed at $1.1809
- The Japanese yen was little changed at 109.82 per dollar
- The offshore yuan rose 0.2% to 6.5117 per dollar
- The British pound was little changed at $1.3891
Bonds
- The yield on 10-year Treasuries was little changed at 1.23%
- Germany’s 10-year yield declined one basis point to -0.45%
- Britain’s 10-year yield declined one basis point to 0.55%
Commodities
- Brent crude rose 0.5% to $74.84 a barrel
- Spot gold rose 0.4% to $1,805.62 an ounce