GLOBAL MARKETS – Equities fall amid earnings gloom, as persistent inflation lifts Treasury yields…..
Stocks snapped a three-day winning streak on Thursday as disappointing forecasts from Facebook and Instagram owner Meta hammered the tech sector, and Japan’s yen sank through 155 per dollar for the first time since 1990. Tepid U.S. GDP data pushed Wall Street lower at its open, and Meta’s slump also soured the mood. More Big Tech earnings are scheduled for later in the day.
U.S. Treasury yields rose after the data showed signs of persistent inflation, lowering hopes that the Federal Reserve will cut interest rates anytime soon.
Gold trimmed gain. MSCI’s gauge of stocks across the globe fell 4.54 points, or 0.60%, to 754.92 by 2:34 p.m. ET (1834 GMT). In an earnings-packed week, tech bellwethers are in the spotlight, with Google parent Alphabet , Microsoft, and Intel due to report after Thursday’s closing bell.
European shares closed down 0.7%, paring losses after shedding more than 1% intraday, hit by bleak earnings from consumer giant Nestle and Dutch digital payments firm Adyen. London’s FTSE 100 <.FTSE> held onto gains, up 0.26% at a record high as UK-listed miner Anglo American surged on a $39 billion buyout offer from Australian rival BHP.
Hotter-than-expected inflation reports have pushed back and reduced expectations for Federal Reserve interest rate cuts, with markets now pricing in roughly a 70% chance of a first reduction in September. Investors are not even fully convinced there will be another cut this year, having expected around six cuts at the start of the year. The shifting expectations of U.S. rates have lifted Treasury yields and the dollar, casting a shadow on the currency market. Against a basket of currencies, the dollar <.DXY> ticked fractionally higher to 105.89 after the GDP data. The yield on benchmark U.S. 10-year notes rose 5.2 basis points to 4.706%, from 4.654% late on Wednesday. The 2-year note yield, which typically moves in step with interest rate expectations, rose 6.1 basis points to 4.9975%, from 4.937% late on Wednesday.
The Japanese yen weakened 0.12% against the greenback at 155.53 per dollar and touched its lowest level in 34 years. It is now firmly past the latest line in the sand traders had drawn for Japan to intervene in the markets. The Bank of Japan started its two-day rate-setting meeting on Thursday, with expectations that it will keep its key short-term interest rate target unchanged. Attention will be on what Bank of Japan Governor Kazuo Ueda’s says about the yen’s struggles.
U.S. crude settled up 0.92% to $83.57 a barrel and Brent settled at $89.01 per barrel, up 1.12% on the day. Spot gold added 0.68% to $2,331.49 an ounce. U.S. gold futures fell 0.2% to $2,319.90 an ounce.
Reporting by Marc Jones Editing by Gareth Jones, Elaine Hardcastle and Leslie Adler.
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