Mark Jones
LONDON (Reuters) – Stocks snapped a three-day winning streak on Thursday as downbeat forecasts from Facebook (NASDAQ:) and Instagram owner Meta hit the technology sector, while currency markets watched the Japanese yen fall to 155 per dollar for the first time since 1990 . .
Tepid US GDP data pushes Wall Street lower at open [.N] but with more earnings from big tech companies slated for later, it was the downturn in Meta that dampened the mood the most.
It fell nearly 15% in after-hours trading on Wednesday. Japanese tech shares then fell 2%, followed by a 1% decline in European tech stocks as dealers appeared to have forgotten the optimism generated by Tesla the day before. ()
In an earnings-heavy week, tech leaders are in the spotlight, with Alphabet (NASDAQ:), Microsoft (NASDAQ:) and Intel (NASDAQ:) also set to report after the closing bell on Thursday.
“If Meta is any guide, it appears the market is simply intolerant of online: if you have a good run in the first and second quarters, you either turn out the lights or the market takes its pound of meat,” said Chris Weston, head of research at Pepperstone.
Robert Alster, chief investment officer at Close Brothers Asset Management, added that Mark Zuckerberg’s comments about Meta needing to spend money to keep up with the artificial intelligence arms race were another important factor.
European earnings and M&A deals also flooded the flows.
London shares hit another all-time high as UK-listed miner Anglo American (JO:) rose 11% on a $39 billion buyout offer from rival BHP, while Deutsche Bank and BNP Paribas (OTC:) rose after upbeat reports from the eurozone’s largest lenders. first quarter profit. ()
remove advertising
.
SLOWdown USA
Beyond corporate earnings, investors digested a sharper-than-expected slowdown in U.S. economic growth in the first quarter.
According to the Commerce Department’s Bureau of Economic Analysis, GDP increased 1.6% year over year, led by consumer spending. Economists polled by Reuters had forecast growth of 2.4%.
“Despite the expected slowdown in GDP in 2024, there are no imminent signs of a recession,” said Mutual of America Capital Management Chairman and CEO Steven Rich.
Recent hotter-than-expected inflation reports have dampened expectations of an interest rate cut by the Federal Reserve, with markets now pricing the likelihood of the first cut in September at about 70%. They are not even completely sure that there will be another reduction this year, since about six reductions were expected at the beginning of the year.
Changing expectations about US rates sent Treasury yields and the dollar higher, casting a shadow over the foreign exchange market. Against a basket of currencies, the dollar rose slightly to 105.89 following the release of GDP data.
The Japanese yen, which is sensitive to U.S. Treasury yields, bore the brunt of the dollar’s rise and has fallen 9% this year, the worst-performing G-10 currency.
It hit 155.70 per dollar early in the day on European and post-GDP data, its lowest level in 34 years. It is also now well past the final line in the sand that sand traders have drawn for Japan to intervene in markets.
“Tokyo has not yet intervened, and I reiterate that it looks like there will be no intervention as long as the economy continues to grow in a relatively stable manner,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
remove advertising
.
The Bank of Japan (BOJ) began its two-day rate-setting meeting on Thursday expecting it to keep its key short-term interest rate target unchanged.
Attention will be focused on what Bank of Japan Governor Kazuo Ueda says about the problems with the yen. Ueda will want to avoid a repeat of the episode in 2022, when his predecessor’s remarks triggered a big fall in the yen that forced Tokyo to spend an estimated $60 billion trying to stabilize the situation again.
“At this stage, if they intervened, they might just throw their money into the sea,” said Rob Carnell, head of Asia-Pacific research at ING. “Either way, it will be beneficial, except in the very short term.”
Benchmark bond prices fell slightly following the release of US data, while both indices were little changed at $88.10 and $82.87 per barrel, respectively. Gold, which hit a record high earlier this month, rose to $2,330 an ounce. [O/R] [GOL/]