Tech Stocks Drop Again as Growth Concerns Increase – Nasdaq Off 1.5%
US equity markets delivered a mixed performance overnight, with the Dow Jones outperforming while technology stocks remained under pressure. The Dow rose 0.53% to close at 49,501; however, the broader market struggled, with the S&P 500 falling 0.51% to 6,882 and the Nasdaq sliding 1.51% to 22,902, as ongoing growth and expenditure concerns continued to weigh on the tech sector. In fixed income markets, Treasury yields were split across the curve. The 2-year yield eased 1.6 basis points to 3.553%, while the 10-year yield edged 0.8 basis points higher to 4.274%. The US Dollar Index firmed 0.22% to 97.65, recovering some of its recent lost ground. Commodities were again highly active. Oil prices rebounded sharply after reports indicated that talks between the US and Iran may not proceed. Brent rose 2.17% to $68.80, while WTI gained 2.09% to settle at $64.53. Precious metals traded in wide intraday ranges, with gold finishing 0.37% higher at $4,964.93, as strong two-way flows continued to dominate price action.
Yen Back in Focus for FX Traders
The Yen has seen a sharp correction in the past few trading sessions against both the greenback and on the crosses. USDJPY has jumped just over 3% from the end-of-January lows and is now back at levels that could concern Japanese authorities. Experienced traders have seen this pattern before, when the BOJ intervenes in markets — or talks intervention — and the Yen moves significantly on the first government action. However, once it’s clear that the official action has finished, the market will test the resolve of the central bank and push against the move — after all, it’s natural for the market to move back to where it was naturally before forced intervention — and then the games start. Will we see intervention again at these levels, verbal or otherwise, or will the market then look to test higher levels again? In general, most traders will be expecting more volatility in the currency in the coming days, especially if the Yen continues to weaken.
Central Banks in Focus for Markets Today
The focus now shifts firmly to central banks, with both the Bank of England and the European Central Bank set to announce policy decisions during the European session. There is little on the calendar in the Asian session today; however, markets are expecting to start on the back foot after a weak close on Wall Street overnight. The London session will see traders strongly focusing on the BOE and ECB interest rate calls, with both expected to keep rates on hold. However, traders are expecting to see moves in the Euro and Pound on the back of forward guidance from the statements and press conferences. In the New York session, attention turns back to labour market data, with Weekly Unemployment Claims (exp. 212k) and JOLTS Job Openings data due following the resumption of US government operations. Volatility is expected to remain elevated, given the heavy policy calendar and ongoing geopolitical developments.
