Mike Dolan provides an update on the US and global markets for the day ahead.
Nvidia, the Nasdaq and the S&P500 were giddy as they hit record highs on Thursday, as global markets begin to take stock of a bumper 2024 heading into the half next week – but with the dollar regaining its walking forward.
The latest figures for the US economy show some slowdown in activity in May and June, but the trigger for the decline in mega-caps was not obvious – notably because the real-time “GDPNow” estimate of the Atlanta Federal Reserve still shows strong 3% growth for the quarter.
The scale of recent rises in tech stocks may have been too rapid, with mid-year accounting prompting a pause – and perhaps investors are now bracing for a tougher second half until the US election of November. Next Thursday’s televised presidential debate could be the signal.
Regardless, Nvidia’s 3.5% drop on the day meant it ceded its brief role as the most valuable company to Microsoft, and the tech-heavy Nasdaq ended its a streak of seven days of records at the close.
Overall stocks were more mixed, however, with the Dow Jones gaining 0.7% and the small-cap Russell 2000 remaining flat.
Despite a further decline in Treasury yields following failures in housing starts and jobless claims, the dollar continued to gain momentum.
And the greenback’s gains have been quite widespread – against European currencies where central bank rate cuts and bets on easing are increasing, but also against the Japanese yen and the Chinese yuan in Asia.
Foreign capital has again withdrawn from China, amid growing global trade tensions and with no sign of an end to that country’s deepening real estate crisis.
Foreign portfolio flows have reversed. About 33 billion yuan ($4.54 billion) left mainland China this month through the northern leg of the Stock Connect program, after four months of net inflows.
With an eye on the plenum of the Chinese Communist Party central committee next month and on the G7 countries, growth in activity in the euro zone has slowed markedly.
Euro zone business growth slowed sharply this month as demand fell for the first time since February, a survey showed, with the bloc’s services industry showing signs of weakening as the economy slowed. he manufacturing industry has gotten worse.
Japan’s headline consumer price inflation rebounded less than expected last month, with the gauge excluding energy and fresh food falling to just 2.1%.
British retail trade experienced a sharp rebound in May after an April marked by unfavorable weather conditions.
Euro PMIS flash for June
Business climate in France Main developments which should guide the American markets later on Friday: * S&P Global flash surveys on businesses in June, sales of existing homes in May; retail sales in April in Canada * Mary Daly, President of the Federal Reserve Bank of San Francisco, speaks * Robert Habeck, German Minister of Economy, speaks in Beijing * ECOFIN meeting of finance ministers of the European Union in Luxembourg, in the presence of Luis de Guindos, vice-president of the European Central Bank * Profits of American companies: Carmax, Factset
