“Morning Bid: Brace yourself for a spine-chilling day as investors are haunted by the looming 5% jump ahead of pivotal events – the ECB meeting, GDP figures, and Amazon’s earnings report.”
The selloff in Wall Street stocks continued as bond market turbulence and Middle East tension weighed on investor sentiment. Even the strong performance of tech giants like Facebook and Google-parent Alphabet failed to boost market appetite for Big Tech. The Nasdaq experienced its biggest one-day loss since February, and the Philadelphia SE Semiconductor index saw its biggest plunge of the year. With Amazon due to report later, there was no relief for Wall Street or the broader market. S&P500 and Nasdaq futures were down heavily overnight, and the world stocks index hit its lowest level since March.
In addition to the market turmoil, there were geopolitical concerns as Israel appeared to prepare for a ground invasion of Gaza. This added to the unease in the market, alongside a spike in long-term borrowing rates, with 10-year Treasury yields rising close to their 16-year peak.
The dollar saw a surge to its highest level in almost three weeks, reaching its highest against the Japanese yen in over a year. Meanwhile, the bond market showed little reaction to news of a tentative labor deal between the United Auto Workers union and Ford, which included a record 25% wage hike.
In Europe, stocks and the euro dropped sharply as regional banking shares were hit ahead of the European Central Bank’s policy decision. The ECB was expected to signal the end of its interest rate tightening campaign, but markets were also interested in details about its balance sheet reduction and possible quicker reduction of its bond holdings.
Standard Chartered shares slumped as the lender reported a 33% drop in pre-tax profit due to losses in China. BNP Paribas also fell on lower trading revenue.
Chinese stocks, on the other hand, bucked the global trend and ended marginally higher despite confirmation of a default by property developer Country Garden. This may be attributed to the week’s slew of stimulus measures implemented by the Chinese government.
Key developments that should provide more direction to U.S. markets later on Thursday include the European Central Bank’s policy decision and press conference, the U.S. Q3 GDP report, and various corporate earnings releases.
Overall, the market remains volatile and sensitive to both economic data and geopolitical events. Investors will be closely watching for any signs of stabilization or further deterioration in the coming days.