Nasdaq 100 falls to seven-week low, global hawkish streak roils U.S. dollar, and a full serving of economic data ahead. Here are some of the things people in markets are talking about.
The Nasdaq 100 plunged 1.7 percent to a seven-week low on Thursday as investors rotated into banks, which were cleared by the Fed’s stress test to embark upon massive share repurchase programs. Cheer up: While volatility in tech stocks may have increased, it’s still nowhere close to that of bitcoin. It’s not like the fundamentals are falling apart for the tech giants, either—Facebook announced that it has two billion users (though it has also indicated that ad revenue growth could slow). Meanwhile, Walgreens’ decision to give up on a takeover of Rite Aid amid anti-trust concerns caused acute pain for a handful of big hedge funds.
Hawkish rhetoric from global central bankers has rewritten the script for where interest rates and longer-term yields may be heading across a host of major economies. Ten-year bond yields in the U.S., Germany, England, and Canada all marched higher on Thursday, offering little support for investors amid the retreat in risk assets. The high market-implied probability of rate hikes in England and Canada before the year is out has cast the U.S. dollar in the unfamiliar role of laggard in currency markets. The dollar spot index has given back almost 2 percent over the past three sessions, tied for its worst such showing since early 2016.
There’s a jam-packed day of data for the Asia-Pacific region to end the week. It’s jobs day in Japan, where the unemployment rate and job-to-applicant ratio are expected to hold steady at 2.8 percent and 1.48, respectively. June headline and core inflation out of Tokyo are projected to tick up to annual paces of 0.3 and 0.2 percent. Readings on vehicle production and housing starts for May are slated to be released in the early afternoon. Across the sea, economists are calling for China’s official manufacturing purchasing managers’ index to moderate slightly to 51 from 51.2, a level that still suggests expansion in the sector. Down Under, the rate of monthly private sector credit growth in Australia is expected to hold steady at 0.4 percent in May. First up for the region, however, is South Korea’s May reading of industrial production at 8:00 a.m.Tokyo time, forecast to rise 1.1 percent month on month after a 2.2 percent decline.
The Trump administration’s restrictions on refugees and visitors from six Muslim-majority countries with will go into effect on Thursday night in the U.S., with officials predicting an orderly rollout. A Supreme Court decision earlier this week partly revived the travel ban, which had been blocked by lower courts. The onus was on federal agencies to figure out what constitutes a “bona fide” connection to the U.S., a status that exempts travelers from the restrictions. Some but not all family members of people living in the U.S. qualify for exemption, as well as businesspeople who have had a formal, documented relationship with U.S. parties.
S&P/ASX 200 and Nikkei 225 futures are well in the red as of 5:30 a.m. Tokyo time. Meanwhile, China’s yuan, whose weakness was the market’s biggest irritant not too long ago, is on track for its best quarterly performance since 2010 amid speculation of at least three episodic interventions from the People’s Bank of China to prop it up in June. However, a former foreign-exchange regulator is warning that there’s still much more progress needed for the currency to become stable.
Sent by Bloomberg