Global stocks experienced a decline on Monday, adopting a more cautious stance as Wall Street’s robust second-quarter surge lost momentum towards the end of the previous week.
In Europe, chemical and construction companies witnessed declines, while telecom stocks displayed better performance. Sartorius AG, one of the prominent movers, suffered a significant setback of 15% after issuing a profit warning that exceeded expectations. Disappointed by the lack of anticipated stimulus, Chinese tech companies faced downward pressure in Asia.
The rally on Wall Street has now erased over a year’s worth of losses influenced by the Federal Reserve, as stocks, volatility, and the dollar have shrugged off the impact of ten interest rate increases. However, as the future path of rates becomes increasingly uncertain, traders find themselves oscillating between the allure of the rally and concerns of exhaustion and an overbought market.
Despite the pressure exerted by a $4.2 trillion options expiration at the end of the previous week, the S&P 500 index concluded a fifth consecutive week of gains, surpassing its level on the day the Federal Reserve initiated its campaign.
During its most recent meeting last week, the Fed chose to keep interest rates unchanged but issued a warning regarding potential future tightening. Historically, halting rate hikes for a three-month period following a series of interest rate increases has bolstered stock prices.
On Monday, both the US stock and bond markets remained closed due to a holiday.
Conversely, Chinese tech companies, including Alibaba Group Holding Ltd, JD.com Inc., and Baidu Inc., experienced declines of over 3%, causing the Hang Seng Tech index to drop as much as 2.9%.
Reports concerning China’s State Council meeting on Friday, chaired by Premier Li Qiang, lacked detailed information about potential stimulus measures and their timing. The absence of concrete evidence for economic support adds to concerns about a decelerating economy, unsettling investors who had driven up Chinese equities last week in anticipation of comprehensive measures.
Commodity prices also exhibited signs of weakness, with Brent and West Texas Intermediate prices slipping by approximately 1%. Gold, on the other hand, remained relatively stable.
Federal Reserve Chair Jerome Powell is scheduled to present his semi-annual report to Congress on Wednesday. Additionally, the presidents of the Federal Reserve Bank of St. Louis, James Bullard, and their counterparts in New York and Chicago are set to deliver speeches in the upcoming week.
Here are the events taking place this week:
- Monday: US observes Juneteenth holiday.
- Tuesday: China announces loan prime rates. US housing starts data released. Federal Reserve Bank of St. Louis President James Bullard speaks. New York Fed President John Williams speaks.
- Wednesday: Federal Reserve Chair Jerome Powell delivers semi-annual congressional testimony before the House Financial Services Committee. Federal Reserve Bank of Chicago President Austan Goolsbee speaks.
- Thursday: Eurozone consumer confidence report. Rate decisions in the UK, Switzerland, Indonesia, Norway, Mexico, Philippines, and Turkey. US Conference Board leading index, initial jobless claims, current account, and existing home sales data released. Federal Reserve Chair Jerome Powell delivers semi-annual testimony to Congress before the Senate Banking Committee. Cleveland Fed’s Loretta Mester speaks.
- Friday: Eurozone S&P Global Eurozone Manufacturing PMI and S&P Global Eurozone Services PMI reports. Japan CPI data. UK S&P Global/CIPS UK Manufacturing PMI report. US S&P Global Manufacturing PMI report. Federal Reserve Bank of St. Louis President James Bullard speaks.
Here are the main market movements:
Stocks:
- The Stoxx Europe 600 declined by 0.5% as of 8:44 a.m. London time.
- S&P 500 futures saw a 0.1% increase.
- Nasdaq 100 futures rose by 0.2%.
- Futures on the Dow Jones Industrial Average remained relatively stable.
- The MSCI Asia Pacific Index fell by 0.6%.
- The MSCI Emerging Markets Index dropped by 0.7%.
Currencies:
- The Bloomberg Dollar Spot Index showed little change.
- The euro remained steady at $1.0934.
- The Japanese yen maintained its position at 141.90 per dollar.
- The offshore yuan declined by 0.4% to 7.1579 per dollar.
- The British pound was mostly unchanged at $1.2827.
Cryptocurrencies:
- Bitcoin experienced a slight 0.2% decline, reaching $26,427.29.
- Ether fell by 0.3% to $1,725.1.
Bonds:
- The yield on 10-year Treasuries remained stable at 3.76%.
- Germany’s 10-year yield showed little change at 2.47%.
- Britain’s 10-year yield increased by two basis points to 4.43%.
Commodities:
- Brent crude oil dropped by 0.7% to $76.06 per barrel.
- Spot gold decreased by 0.2% to $1,953.65 per ounce.
- Key Prices for PH Bluechip Stocks 30% Above 52-Week Low - June 4, 2024
- May 2024 Market Sentiment Rating of 30 PH Bluechip Stocks - June 3, 2024
- EquiTalks: ICT, BPI, AEV Updates – 5.29.2024 - May 29, 2024
