Mark Jones and Ankur Banerjee
LONDON/SINGAPORE (Reuters) – Global stocks snapped a three-day winning streak on Thursday as disappointing forecasts from Facebook (NASDAQ:) and Instagram parent Meta hit tech, while the yen fell to 155 to the dollar for the first time since 1990 kept the exchange rate. Traders are ready to intervene.
Both first-quarter US GDP data and additional Big Tech earnings were scheduled for later in the day, but for now the mood was dampened by Meta’s 15% after-hours price drop.
Japanese tech shares fell 2% in Asian trading, while European tech shares fell 0.8% in early trade as traders acted almost the opposite way from the previous day after Tesla (NASDAQ:) promised new models by the beginning of next year. ()
In an earnings-heavy week, tech leaders are in the spotlight, with Alphabet (NASDAQ:), Microsoft (NASDAQ:) and Intel (NASDAQ:) also due to report on Thursday.
“If Meta is any guide, it appears the market is simply intolerant of online: if you have a good run in the first and second quarters, you either turn out the lights or the market takes its pound of meat,” said Chris Weston, head of research at Pepperstone.
Close Brothers Asset Management chief investment officer Robert Alster added that Mark Zuckerberg’s comments about Meta needing to spend money to keep up with the artificial intelligence arms race were another important factor.
European earnings and M&A deals also flooded the flows.
London shares hit another all-time high, with UK-listed miner Anglo American (JO:) up 11% on a buyout offer from rival BHP, while Deutsche Bank fell and BNP Paribas (OTC 🙂 rose after the eurozone’s largest lenders were the first to publish an optimistic forecast for shares. quarterly profit. ()
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US GDP
In addition to corporate earnings, investors will be focused on first-quarter US gross domestic product (GDP) data, which will be released later.
Recent hotter-than-expected inflation reports have dampened expectations for an interest rate cut by the Federal Reserve, with markets now pricing in about a 70% chance of the first cut in September. They are not even completely sure that there will be another reduction this year, since about six reductions were expected at the beginning of the year.
Changing expectations about US rates sent Treasury yields and the dollar higher, casting a shadow over the foreign exchange market. Against a basket of currencies, the dollar remained virtually unchanged at 105.75.
The Japanese yen, which is sensitive to U.S. Treasury yields, bore the brunt of the dollar’s rise and has fallen 9% this year, the worst-performing G-10 currency.
The yen climbed to 155.65 per dollar on Thursday after touching 155.675 during the Asian session, its lowest in 34 years. It also broke above the 155 yen level, which some traders had flagged as the last line at which Japan could act.
“Tokyo has not yet intervened, and I reiterate that it looks like there will be no intervention as long as the economy continues to grow in a relatively stable manner,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
The Bank of Japan (BOJ) began its two-day rate-setting meeting on Thursday expecting it to keep its key short-term interest rate target unchanged.
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Attention will be focused on what Bank of Japan Governor Kazuo Ueda says about the problems with the yen. Ueda will want to avoid a repeat of the episode in 2022, when his predecessor’s remarks triggered a big fall in the yen that forced Tokyo to spend an estimated $60 billion trying to stabilize the situation again.
“At this stage, if they intervened, they might just throw their money into the sea,” said Rob Carnell, head of Asia-Pacific research at ING. “Either way, it will be beneficial, except in the very short term.”
In commodity markets, the price rose 0.1% to $82.89 a barrel to $88.13, up 0.12% on the day. Gold, which hit a record high earlier this month, rose to $2,326 an ounce. [O/R] [GOL/]