Rethinking recession risks and AI, markets take fright
A look at the day ahead in U.S. and global markets from Mike Dolan
August looks anxious already - as stock markets take fright at Big Tech earnings and start to reconsider 'hard landing' scenarios for the world economy just as central banks ease and bond yields plummet.
It's been a frantic week's trading in all corners of the financial world. Regardless of the recently vaunted rotation of stock sectors, the biggest rotation that's emerging is one from stocks to bonds as 'recession' creeps back into parlance.
Five, seven and 10-year Treasury yields have all plunged below 4% since the Federal Reserve signalled on Wednesday that its first interest rate is coming in seven weeks' time - just as manufacturing surveys slip into contraction across the world and the U.S. jobs market cools further.
The stakes are higher than ever for Friday's July employment report, with markets watching closely for a possible triggering of the so-called 'Sahm rule' that maps the pace of a rising U.S. jobless rate against the onset of recession.
Even though talk of broad recession still seems far-fetched, with real-time U.S. GDP estimates still tracking growth of 2.5%, fears of a negative pulse through the industrial world from a stuttering Chinese economy have been building for weeks.
With the Bank of England joining G7 peers in starting its rate cut cycle on Thursday too, markets are starting to price the possibility that a September Fed rate cut could be as much as 50 basis points. Some 32bps of cuts are now priced for that month and 85bps over the remainder of the year.
But the surge in market volatility, which saw the VIX 'fear index' .VIX top the 20 level on Friday for the first time since April, centred on yet another shakeout in Big Tech as the megacaps and a whole host of high-flying chipmakers reported disappointing earnings.
Central to the worry is whether huge spends on artificial intelligence investments are warranted and whether AI will ultimately deliver on its promise in the wider economy.
While Apple AAPL.O held the line overnight after its post-bell results beat estimates, Amazon AMZN.O dived more than 8% after its update.
And although Meta rallied on Thursday, poor results from Qualcomm and Arm saw their shares and many of the big chipmakers swoon once again.
Intel INTC.O dropped about 20% overnight on its miss, dividend suspension and job cuts in what would be its worst day since the 2000 dot.com bubble burst. Taiwan chip giant TSMC 2330.TW lost almost 6%.
After a 7% loss on Thursday, and a wildly volatile week, AI darling Nvidia NVDA.O lost another 2% out of hours on Friday following media reports that the U.S. government is launching an antitrust probe into the company following complaints from rival chipmakers.
Another bruising day on Thursday for the S&P500 .SPX, Nasdaq .IXIC and Russell 2000 small caps .RUT ripped around the world overnight.
Irked additionally by the week's Bank of Japan rate rise and yen surge, the Nikkei .N225 plunged almost 6% in its worst day since the pandemic hit in 2020.
China, at the heart of the brewing global industrial slowdown after news that its factory sector contracted again in July, saw its stocks .CSI300 drop more than 1%. European stocks .STOXXE were also off about 1%.
With bond yields racing to their lowest since the feverish Fed easing speculation of early 2024, even Japanese 10-year yields JP10YT=RR fell back below 1% for the first time in over a month despite the week's BOJ move. The yen JPY= held steady at just under 150 per dollar.
But in all the stock and bond ructions, currency markets were generally much steadier. The dollar index .DXY was only slightly lower, with the Swiss franc CHF= outperforming amid all the angst and hitting its strongest since February.
The political backdrop this month is another big consideration for U.S. markets.
Whatever is driving trading patterns, it's no longer the so-called 'Trump trade'.
After a wave of opinion polls showing enthusiasm for Vice President Kamala Harris' bid for the White House, betting markets now put her chances of winning as higher than that of Republican challenger Donald Trump for the first time.
Key developments that should provide more direction to U.S. markets later on Friday:
* US July employment report, June factory goods orders
* Richmond Federal Reserve President Thomas Barkin speaks; Bank of England Chief Economist Huw Pill speaks
* US corporate earnings: Exxon Mobil, Chevron, Cboe Global Markets, Coinbase Global, PPL, Linde, Perella Weinberg, Church & Dwight, LyondellBassell Industries etc
Stocks take fright https://tmsnrt.rs/3A9rcai
'Sahm rule' recession flag? https://tmsnrt.rs/4cbXhvk
Britain joins the rate cut club https://reut.rs/3StBOak
Manufacturing and commodities retreat sharply https://tmsnrt.rs/3SAocdr
Cloud providers' capital spend surges on AI investments https://reut.rs/4ceknl4
By Mike Dolan, editing by Gareth Jones
mike.dolan@thomsonreuters.com
İlgili varlıklar
En son haberler
Bildirim: XM Group şirketlerinin her biri yalnızca gerçekleştirme hizmeti ve online yatırım platformumuza erişim sağlar. Herhangi bir kişinin web sitesinde bulunan veya web sitesi üzerinden sağlanan içeriği görüntülemesine ve/veya kullanmasına izin vermek, bu hizmeti değiştirmek veya genişletmek amaçlı değildir ve bu hizmeti ne değiştirir ne de genişletir. Bu tür erişim ve kullanım her zaman şunlara tabidir: (i) Şartlar ve Koşullar; (ii) Risk Uyarıları ve (iii) Tam Bildirim. Bu nedenle bu tür içerikler yalnızca genel bilgi amacıyla sağlanır. Özellikle, online yatırım platformumuzun içeriklerinin finans piyasalarında herhangi bir işleme girmek için bir teşvik veya bir teklif olmadığını lütfen dikkate alın. Herhangi bir finans piyasasında yatırım yapmak sermayeniz için önemli düzeyde risk taşır.
Online yatırım platformumuzda yayınlanan tüm materyaller yalnızca eğitim/bilgilendirme amaçlıdır ve finansal tavsiye, yatırım vergisi veya yatırım tavsiyesi ve önerileri ya da yatırım fiyatlarımızın kaydı veya herhangi bir finansal enstrümanda işlem yapılması için bir teklif veya teşvik ya da talep edilmemiş finansal promosyonları içermez ve içerdiği şeklinde bir değerlendirme yapılmamalıdır.
Görüşler, haberler, araştırma, analizler, fiyatlar, diğer bilgiler veya bu web sitesinde bulunan üçüncü taraf sitelere verilen bağlantılar gibi her türlü üçüncü taraf içeriğin yanı sıra XM tarafından hazırlanan içerik de “olduğu gibi” esasına göre, genel piyasa yorumu olarak sağlanır ve bir yatırım tavsiyesi oluşturmaz. Herhangi bir içeriğin yatırım araştırması olarak yorumlanmasıyla ilgili olarak, içeriğin bağımsız yatırım araştırmasını desteklemek üzere tasarlanmış yasal gerekliliklere uygun hazırlanmadığını ve bu amacın güdülmediğini, aynı şekilde ilgili yasalar ve mevzuatlar kapsamında pazarlama iletişimi olarak değerlendirileceğini dikkate almalı ve kabul etmelisiniz. Buradan erişebileceğiniz Bağımsız Olmayan Yatırım Araştırması Bildirimimizi ve yukarıdaki bilgilerle ilgili Risk Uyarımızı okuduğunuzdan ve anladığınızdan emin olun.
