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Stock markets a sea of red on rate jitters

bear markets

Wall Street slumped on a broad-based selloff, with all three benchmark indexes extending losses as government bond yields surged for the second straight trading day after the ADP job data indicated a much stronger-than-expected labour market ahead of the US non-farm payroll release later today. The US 2-year treasury yield rose to 5.05% for the first time since 2007 before fading some gains as odds for the Fed to do more rate hikes strengthened. The VIX jumped 9% to above 15 on soured sentiment. The selloff may have also been caused by an overbought market in the first half year. Some AI - labelled stocks are losing steam, with Nvidia, Microsoft, and AMD all pulling back from their all-time highs since mid-June.

The European stock markets also closed as a sea of red amid the bond yield jitters, with the Euro Stoxx 50 shedding 2.9% and the FTSE 100 sliding 2.2%, led by travel and leisure stocks.  

Asian equities are set to open lower after a gloomy day as Fed’s higher rates indication in the FOMC meeting minutes slashed risk sentiment on Thursday. Equity futures were all in red, with the ASX 200 futures down 1.24%, the Hang Seng Index futures falling 3.02%, and the Nikkei 225 slid 1.70%.

Price movers:

  • All 11 sectors finished lower in the S&P 500, with Energy leading losses, down 2.45%, followed by Consumer Discretionary, Utilities, and Communication Services, down 1.65%, 1.21%, and 1.06%, respectively. The defensive sector, like Consumer Staples, was relatively resilient, sliding slightly, down 0.34%.  
  • Meta Platforms’ Threads app gained 30 million signups on the first day of launching, becoming the biggest rival of Twitter. Users have to have an Instagram account to use Threads. Hence, this will also cross-app’s utilization. Twitter is seen to lose users and advertisers amid Elon’s takeover and current limitation on per-day reads and posts, which makes Threads the most threatening competitor to it.
  • Risk-off prevailed in the FX markets, with haven currencies, such as the Eurodollar, the Japanese Yen, and the US dollar climbing higher against commodity currencies like the Australian dollar, the Canadian dollar, and the New Zealand dollar.
  • Gold fell amid surging rates but bounced off a session low. Gold prices swung in directions as the US bond yield surge pressed on the metal, but risk-off sentiment offsets some losses. Gold may take off again if the market correction continues.  
  • The WTI futures consolidated above the 50-day moving average as OPEC+ members, including Saudi and Russia, both intend to cut outputs further to stabilize oil price. At the same time,e China’s Premier pledged to implement more stimulus measures to aid economic recovery.  

ASX and NZX announcements/news:

  • Sky (ASX/NZX: SKT) and Warner Bros. Discovery announced an extension of the multi-year content and platform agreement, securing Sky as the home of HBO, Max Originals, Warner Bros., and Discovery globally.

Today’s agenda:

  • US Non-Farm Payroll for June

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