Wall Street was under pressure as the tech-led rally paused, with major mega-cap stocks pulling back from their recent highs. Sector rotation led to a broad selloff in the growth stocks, sending the Nasdaq dipper after the first weekly loss in 9. Tesla’s shares shed 6%, Nvidia’s stocks fell 3.7%, and Meta Platforms slipped 3.5%, implying a potential major correction in these year-to-date bullish stars. Dow and S&P 500 were also lower due to tech’s retreat, while bonds, gold, and the VIX climbed, suggesting risk-off mounts following central banks’ hawkish guidance last week. Russia’s mutiny may have added to the haven-seeking rotation in asset classes.
The US dollar fell slightly as bond yields were broadly lower on risk-aversion trades. The US 10-2-year yield spread deepened further to the lowest since 8 March, repeatedly warning of rising recession risks.
In Asia, China’s holiday spending fell short of the pre-pandemic level, implying ongoing weak domestic demand, which strengthens bets for more government-supportive measures to aid the economy, with the Hang Seng Index futures up 0.52%, pointing to a higher open in the regional market. The ASX 200 futures were also up 0.28% as energy and material stocks rose on Wall Street. But the Nikkei 225 fell 0.37%, leading to a lower open in the Japanese stock markets.
- 5 out of 11 sectors in the S&P 500 finished lower, with growth sectors, including technology, consumer discretionary, and communication services, leading losses, down 1.88%, 1.25%, and 1.03%, respectively. Real estate and energy were the best performers as oppositely moved against rates, up 2.21% and 1.71%, respectively.
- Meta Platforms’ shares slipped 3.5% amid a broad selloff in tech. The company launched Meta Quest + service based on its VR headsets on Monday, with a monthly subscription at US$7399 per month, or US$59.99 annually. The subscription will be for its Quest 2 and Quest Pro. The cost of its VR headsets is about one-third of Apple’s newly released mixed-reality headsets.
- Pfizer’s shares slumped 3.9% as the drug maker ended development in obesity and diabetes drugs due to elevated levels of liver enzymes found in clinical trials. The company’s stocks tumbled about 33% from their peak in December 2022.
- Gold futures rose for the second straight trading day on a softened USD and lowered bond yields. Risk-off sentiment arises amid a swift retreat in US tech stocks and Russia’s mutiny. Gold futures’ near-term support can be found around 1,920 at the low last Friday, facing potential imminent resistance around 1, 950.
- The WTI futures’ price bounced off a session low but finished under $70 after the Russian mutiny was aborted. Russia’s rebellion caused a selloff in oil markets in the early session due to uncertainty of supplies. The sentiment in crude markets stayed fragile on economic concerns and China’s faltering rebound.
ASX and NZX announcements/news:
- Genesis Energy (ASX/NZX: GNE) appoints Stephen England-Hall as the new Chief Customer Officer (CCO). Stephen has previously held Chief Executive roles at Real NZ, Tourism New Zealand, and Razorfish in the United Kingdom.
- BOJ core CPI for May y/y