The rebound weakens in US equities; book falls

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Another massive sell-off in mega-cap tech stocks resulted in a fourth loss in five days, as investors feared valuations had stretched too far in a five-month rally. Treasury bills rose with the dollar.The S&P 500 fell 2.1%. Volatility was even more prevalent in the Nasdaq 100, where near-close races were at least 1% for seven sessions. Energy companies, a small to mid-sized cohort, have plunged as crude drops back to US $ 37 a barrel in New York City. Treasury bills reversed their losses as the decline in stocks accelerated. Gold has come down, while copper has fallen. The dollar strengthened against major competitors.

Volatility continued to take hold of US financial markets after a rally that added US $ 7 trillion to the value of US stocks over five months. There were many reasons for caution, although no single factor set the tone. Signs were mounting that the pandemic continued to disrupt the global economy. In the United States, data showed cracks in the recent strength of the labor market, while Europe has once again become a hotspot for viruses. Congress has stayed very distant on a new relief bill.

“We probably haven’t seen the full correction happen yet,” said Matt Forester, chief investment officer at BNY Mellon Lockwood Advisors. “It’s difficult to pinpoint a specific catalyst, but currency volatility has increased today due to concerns about a hard Brexit and we’ve seen worse news about the virus in Europe.”

In Europe, the pound fell amid renewed tensions over Brexit. The euro jumped 0.7% as the region’s central bank said there was no reason to overreact to the strength of the currency. BP Plc slipped after making its first venture in offshore wind energy with a US $ 1.1 billion purchase of US assets from Equinor ASA of Norway.

After a few days of volatility, technology stocks are still in the foreground with a fragile rebound threatened. Yesterday, the S&P 500 rose the most since June overnight and the Nasdaq rebounded from an 11% rout that brought the gauge back to its 50-day moving average, a closely watched technical level.

“It is too early to declare that the recovery in growth is over, but this week should be a reminder to investors that if the exuberance remains, the storm is never far away,” wrote Geir Lode, head of international equities. worldwide at Federated Hermes. in a note to customers.

Here are some key upcoming events:

  • US CPI data is due on Friday, consumer prices are expected to have risen in August.

Here are the main movements in the markets:

Stocks

  • The S&P 500 Index fell 1.8% at 4 p.m. New York time.
  • The Nasdaq 100 lost 2.1%.
  • The Stoxx Europe 600 index fell 0.6%.
  • The MSCI Asia Pacific index progressed by 0.7%.
  • The MSCI Emerging Markets Index rose 0.4 percent.

Devises

  • The Bloomberg Dollar Spot Index rose 0.3 percent.
  • The euro gained 0.2 percent to US $ 1.183.
  • The British pound fell 1.6 percent to US $ 1.2789.
  • The Japanese yen rose 0.1 percent to 106.11 per dollar.
  • The offshore yuan was little changed at 6.8315 to the dollar.

Obligations

  • The yield on 10-year Treasuries fell two basis points to 0.68 percent.
  • The yield on two-year Treasuries fell two basis points to 0.1389 percent.
  • Germany’s 10-year yield jumped one basis point to -0.43 percent.
  • Britain’s 10-year yield gained one basis point to 0.247 percent.
  • Japan’s 10-year yield fell less than a basis point to 0.028 percent.

Basic products

  • West Texas Intermediate crude fell 2.5 percent to US $ 37.08 a barrel.
  • Brent crude fell 2.3 percent to US $ 39.84 a barrel.
  • Gold futures 0.2 percent at US $ 1,952.10 an ounce.

– With the help of Anchalee Worrachate and Cecile Gutscher.



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