English
English
Tiếng Việt
ภาษาไทย
繁體中文
한국어
Bahasa Indonesia
Español
Português
zu-ZA
0

Market Analysis

Megacap Tech Weighs on Stocks, Oil Prices Inch Up
Amos Simanungkalit · 144.3K Views

14

 

Stocks sagged worldwide on Wednesday as earnings reports from Tesla (NASDAQ) and European luxury brands disappointed investors. Meanwhile, oil prices edged higher after trading near six-week lows due to concerns over weak global demand.

The U.S. dollar edged lower, with traders anticipating an inflation reading on Friday and a Federal Reserve meeting next week. The yen climbed to a seven-week high ahead of its own central bank meeting.

"The big story is clearly the earnings front, with reports being mixed, and Tesla probably being the most disappointing one," said Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions in Boston.

MSCI's broadest index of Asia-Pacific shares outside Japan dropped 1.7%, while Japan's Nikkei fell 1%.

On Wall Street, all three main indexes closed lower, led by declines in technology, consumer discretionary, and communication services stocks.

Tesla's shares slumped 12.3% after reporting its lowest profit margin in five years amid waning demand for electric vehicles. Other "Magnificent Seven" stocks, including Nvidia (NASDAQ), Alphabet (NASDAQ), Amazon (NASDAQ), and Microsoft (NASDAQ), closed down between 2.8% and 6.8%.

The Dow Jones Industrial Average fell 1.25% to 39,853.87, the S&P 500 lost 2.31% to 5,427.13, and the Nasdaq Composite dropped 3.64% to 17,342.41.

The pan-European STOXX 600 index declined 0.61% to 512.30 points, as the world's biggest luxury group, LVMH, reported slower sales growth with Chinese shoppers reining in their spending.

"It's the curse of high expectations, especially for the tech companies that have been the market darlings," said James St. Aubin, chief investment officer at Sierra Mutual Funds in Santa Monica, California.

RATE CUT EXPECTATIONS

Global subdued stock trading reflected markets looking for direction, with traders digesting various themes including the U.S. election, expectations of rate cuts, and weak corporate earnings reports.

Oil prices settled higher due to falling U.S. crude inventories and supply risks from wildfires in Canada but remained near month-and-a-half lows amid lackluster demand.

Brent crude futures closed 0.9% higher at $81.71 a barrel, and U.S. West Texas Intermediate crude rose 0.8% to $77.59 per barrel.

U.S. GDP data on Thursday and personal consumption expenditure data - the Fed's favored measure of inflation - on Friday could help investors gauge when interest rates might be cut.

Markets are pricing in 62 basis points of easing this year, with a cut in September at 95%, according to the CME FedWatch tool. The benchmark U.S. 10-year Treasury yield fell for a second straight session, rising 4.9 basis points to 4.288%.

"The rotation is in full force. Magnificent 7 earnings growth is decelerating, while the rest are accelerating," said Thomas Hayes, chairman at Great Hill Capital in New York. "A Fed cut will add momentum to this trend, favoring cyclicals, small caps, and dividend stocks," he said.

Gold prices slipped after paring early gains, with spot gold losing 0.45% to $2,398.45 an ounce, while U.S. gold futures settled 0.3% higher at $2,415.70.

The Japanese yen strengthened 1.06% against the dollar at 153.97 per dollar. In cryptocurrencies, bitcoin gained 0.01% at $65,848.00, while Ethereum declined 3.18% to $3,372.50.

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author.

Need Help?
Click Here