– Global stock market declines as investors take profits
– Interest rates on government bonds increase once more
– Government bond yields remain low
– Turkish lira strengthens following a significant rate hike of 750 basis points
– View current world foreign exchange rates here: http://tmsnrt.rs/2egbfVh – Check out the performance of global property markets here: http://tmsnrt.rs/2yaDPgn
Written by Koh Gui King and Tom Wilson
On Thursday, global stocks experienced a decline as investors found solace in the fact that tech giant Nvidia’s highly anticipated financial results did not meet expectations. At the same time, there was a rise in Treasury bond yields following a significant sell-off.
Profit-taking led to declines in shares across the board, resulting in a 0.91% drop in the MSCI All Country Stock index. In the United States, the Dow Jones, S&P 500, and Nasdaq Composite all experienced decreases of 1.08%, 1.35%, and 1.9% respectively.
Investors are eagerly anticipating Federal Reserve Chairman Jerome Powell’s speech at a central bank summit in Jackson Hole, Wyoming, on Friday. They hope to gain insights into the future of US interest rates. However, Patrick Harker, president of the Federal Reserve Bank of Philadelphia, has given reassurances by maintaining a calm stance.
During an interview on Thursday, Harker expressed skepticism about the need for the Fed to raise rates again. However, he refrained from making any predictions regarding when the Fed might initiate rate cuts.
Harker informed CNBC that he believed the current actions taken were sufficient, and it would be wise to maintain stability for the remainder of the year to observe the impact on the economy.
Europe also saw an increase in profit-booking, causing European shares to relinquish their earlier gains and finish 0.41% lower.
Robert Ulster, chief investment officer at Close Brothers Asset Management, stressed the utmost importance of observing Jerome Powell’s response to the weak underlying economic data. He questioned how Powell will convey his message and whether we will reach a peak or come to a halt.
Nvidia’s initial gains were reversed as the company’s revenue forecast indicated a slowdown in the growth of generative AI technologies. These technologies, capable of human-like reading and writing abilities and heavily reliant on Nvidia’s chips, are currently displaying no signs of further advancement.
In another location, the Turkish lira surged over 2% against the dollar to reach 26.605 following a rate hike of 750 basis points, which exceeded expectations. Additionally, the country’s main banking index saw a significant increase of over 9% in share prices.
The decrease in government bond yields provided a comforting feeling to the markets, as they became easier to attain.
The yields in the Euro zone have reached a low point, as Germany’s 10-year yield dropped by 1.5 basis points to 2.50%, reaching its lowest level in two weeks at 2.448%.
After easing from a 16-year high, the yield on benchmark 10-year Treasury notes increased to 4.2411% on Wednesday. This rise occurred due to weak business activity data from both the United States and the euro zone. The previous US close had been at 4.198%.
Nvidia’s optimistic outlook also contributed to a 1.5% increase in MSCI’s comprehensive index of Asia-Pacific shares excluding Japan.
Despite this, the index has experienced an approximately 8% decline this month due to the weakening of China’s economy and yuan, along with disappointing factory reports from Japan, which has also contributed to a fragile market sentiment.
On Thursday, there was a rise in shares in China as well, with the blue-chip CSI300 index increasing by 0.7%.
The dollar index, which gauges the strength of the US dollar against six other major currencies in the currency markets, increased by 0.629%, maintaining its peak for the past month.
The euro experienced a 0.51% decrease in value compared to the dollar. Previously, it encountered losses against Asian currencies due to disappointing global economic data.
The Chinese yuan strengthened slightly as the central bank persistently established a daily mid-point at a level that surpassed expectations.
Zhang Zihua, the chief investment officer at Beijing Uni Asset Management, stated that the return of foreign capital has contributed to the stabilization of China’s stock markets, owing to the appreciation of the Chinese currency today.
Oil prices remained relatively stable, with Brent crude futures maintaining their position at $83.20 per barrel, while US West Texas Intermediate crude futures remained steady at $78.89. Additionally, gold experienced a slight increase of 0.12% and reached $1,916.53 per ounce.
Koh Gui King in New York and Tom Wilson in London reported this story, with additional reporting by Julie Zhu in Hong Kong. Kirsten Donovan, Matthew Lewis, and Daniel Wallis contributed to the editing.