US Stocks Hit Again on Tech Concerns – Nasdaq Down 1.9%
US stocks slumped overnight as renewed concerns over stretched tech and AI valuations, and a sharp rise in layoffs from independent employment data, rattled investors. The Nasdaq led the declines, falling 1.9% to 46,912, while the S&P 500 dropped 1.1% to 6,720 and the Dow Jones shed 0.8% to finish the day at 23,053. Bond markets rallied strongly in the risk-off environment, sending yields sharply lower across the curve. The two-year Treasury yield fell 7.4 basis points to 3.56%, while the ten-year yield dropped 7.6 basis points to 4.08%. The US dollar also weakened, with the DXY index sliding 0.4% to 99.72, as softer sentiment and the ongoing government shutdown continued to weigh. Commodities were relatively steady despite the risk-off tone. Brent crude edged lower by 0.1% to settle around $63.45 a barrel, while WTI slipped 0.15% to $59.51. Gold had another rare quiet day, trading in a relatively tight range and dipping just 0.06% to close at $3,977 per ounce.
Dollar Falls off Multi-Month Highs – DXY Down 0.4%
The dollar took a dip off multi-month highs in trading yesterday as a usually little-followed jobs data update led to significant selling against most of the majors. The lack of official jobs numbers, which would normally have dominated market commentary this week, has led investors to look at other sources, and last night’s Challenger numbers indicated a 153k loss of jobs in October, which, if we’d seen a similar number in NFPs, would have rocked the market. It has to be noted that the ADP data on Wednesday, however, did show an improvement, so it is difficult for traders to put too much store in these data hits, and really, we will have to wait until the shutdown finishes and we see the next NFP data. The DXY peaked at 100.36 on Wednesday, just above the August high and at levels not seen since late May, before pulling back into more familiar ranges. Traders are expecting more volatility in the next few days, and with majors still sitting near sensitive levels, we could yet see the dollar push higher again, especially if sentiment flips again in the coming sessions.
Quiet Calendar Day to End the Trading Week
With official US employment data still unavailable due to the government shutdown, markets face another quiet trading day from a data perspective. However, traders will continue to keep a close eye on geopolitical developments, which are expected to remain a key driver of volatility through the sessions. There is little of note on the calendar during both the Asian and London sessions today; however, we do get some data once New York opens. Initially, attention will turn north of the border to Canadian labour market data, with Employment Change numbers (exp -5.0k) and the Unemployment Rate (exp 7.1%) due out, and traders are expecting plenty of volatility in the loonie around the releases. Later in the day, the University of Michigan’s preliminary consumer sentiment (exp 53.0) and inflation expectations (last 4.6%) will be released. Volatility is likely to remain elevated as markets search for direction in the absence of key US data and amid ongoing global uncertainty.
