Stocks continued their downward trend on one of the busiest days of the earnings season, as investors processed results from Microsoft Corp. and Meta Platforms Inc., alongside economic data that clouded expectations for potential Federal Reserve rate cuts.
US equity futures dipped following a muted trading session on Wall Street, with Nasdaq 100 contracts falling over 1%. Both Microsoft and Meta experienced a decline of approximately 4% in pre-market trading, with their combined losses contributing to half of the downturn in Nasdaq futures, according to Bloomberg calculations. Amazon Inc. and Apple Inc. are scheduled to report earnings today.
The US dollar remained steady, on track for its best monthly performance in over two years, as investors reduced expectations for Fed policy easing following strong economic growth and job data released Wednesday. Implied volatility on the Bloomberg Dollar Spot Index for one week surged to its highest level since December 2022, suggesting that traders anticipate significant fluctuations in the currency amid the upcoming US presidential election.
“Sentiment appears shaky this morning as the impact of disappointing earnings from Microsoft and Meta lingers,” stated Michael Brown, a senior research strategist at Pepperstone Group Ltd. “Yesterday’s US GDP data reinforced the ongoing theme of ‘US exceptionalism,’ which continues to support the dollar’s strength. In this environment, it’s challenging to bet against the greenback.”
In Europe, the Stoxx Europe 600 index fell for the third consecutive day, poised for its largest monthly decline in a year. French lender BNP Paribas SA was the most significant contributor to this decline, plummeting over 7% following its third-quarter earnings report.
Asian markets also saw declines, with shares in Japan, Australia, and South Korea dragging down an index of the region’s equities, which is heading for its worst monthly performance since August 2023. Meanwhile, mainland Chinese shares showed mixed results, while those in Hong Kong rose after a report indicated that monthly manufacturing data in China recorded its first expansionary reading since April.
The Bank of Japan (BOJ) decided to keep its benchmark interest rate unchanged amidst increasing uncertainties regarding the economic outlook and government stability, following the ruling coalition’s worst electoral performance since 2009. Consequently, the yen strengthened to below 153 per dollar.
In commodity markets, oil prices edged higher, continuing gains from the previous session, while gold prices declined after reaching a record high in the prior session, driven by demand amid uncertainty surrounding next week’s vote.
Key Economic Events This Week:
- Eurozone CPI and unemployment data, Thursday
- US personal income, spending, and PCE inflation data; initial jobless claims, Thursday
- Earnings reports from Amazon and Apple, Thursday
- China Caixin manufacturing PMI, Friday
- US employment and ISM manufacturing data, Friday
Market Movements:
Stocks:
- Stoxx Europe 600: -0.6%
- S&P 500 futures: -0.8%
- Nasdaq 100 futures: -1.1%
- Dow Jones Industrial Average futures: -0.4%
- MSCI Asia Pacific Index: -0.2%
- MSCI Emerging Markets Index: -0.4%
Currencies:
- Bloomberg Dollar Spot Index: -0.1%
- Euro: $1.0855 (unchanged)
- Japanese Yen: 152.16 per dollar (+0.8%)
- Offshore Yuan: 7.1258 per dollar (unchanged)
- British Pound: $1.2988 (+0.2%)
Cryptocurrencies:
- Bitcoin: $72,360.38 (-0.7%)
- Ether: $2,642.14 (-1.4%)
Bonds:
- 10-year Treasuries yield: 4.28% (-2 basis points)
- Germany’s 10-year yield: 2.41% (+2 basis points)
- Britain’s 10-year yield: 4.41% (+6 basis points)
Commodities:
- Brent Crude: $72.70 per barrel (+0.2%)
- Spot Gold: $2,779.06 per ounce (-0.3%)
Related topic:
What Happens to Bond Futures When Interest Rates Rise?