The drops for Big Tech stocks also pulled the Nasdaq composite down 2% from its own record
Global stocks presented a mixed picture on Friday, with the Japanese yen losing some of its gains after the latest US inflation update boosted Wall Street’s hopes that relief on interest rates could arrive as early as September.
Futures for the S&P 500 and the Dow Jones Industrial Average nudged up by 0.1%. The US dollar fell 2.1% against the yen overnight, trading as low as 157.43 yen, sparking rumours that Japanese authorities may have intervened to enhance the effect of the softer US inflation data. It recouped some of its losses on Friday, climbing to 159.12 yen from 158.80 yen.
Another key data release on the horizon is the US producer price index, due to be published later in the day, while inflation figures for Germany, France, and Italy are also set to be released. European markets kicked off the day on a positive note. Germany’s DAX rose 0.3% to 18,591.54 and Paris’ CAC 40 was up 0.8% at 7,689.42. In London, the FTSE 100 increased by 0.4% to 8,254.06. In Asia, Tokyo’s Nikkei 225 index dropped 2.5% to 41,190.68.
Hong Kong’s Hang Seng index surged 2.6% to 18,293.38 and the Shanghai Composite index remained virtually unchanged at 2,971.29 after data revealed that China’s exports grew by 8.6% in June, exceeding market predictions.
Australia’s S&P/ASX 200 climbed 0.9% to 7,959.30. South Korea’s Kospi dipped 1.2% to 2,857.00. In other markets, Bangkok’s SET index nudged up by 0.1%. Taiwan’s Taiex fell by 2%, with Taiwan Semiconductor dropping 3.7%.
The company had earlier seen a rise after announcing a near 33% increase in its June revenue compared to the same period last year, but it followed Wall Street tech giants downwards.
Overnight on Wall Street, four out of every five stocks in the S&P 500 index rose, although pullbacks for Nvidia, Microsoft and a few other highly influential companies masked this underlying strength. These giants have been the market’s biggest winners amid a frenzy around artificial intelligence technology, leading critics to argue they had become overvalued, and they contributed to dragging the S&P 500 down 0.9% from its all-time high set just a day before.
The declines for Big Tech stocks also dragged the Nasdaq composite down 2% from its own record. This broke seven-day winning streaks for both the S&P 500 and Nasdaq composite. The Dow Jones Industrial Average, which places less emphasis on tech, rose 32 points, or 0.1%.
The trend was decidedly upward for the majority of stocks on Wall Street, particularly those related to housing, real-estate owners and others that benefit from lower interest rates. SBA Communications, which owns towers and other sites used for wireless communications infrastructure, leapt 7.5%, marking the biggest gain in the S&P 500.
The bond market witnessed a surge of activity, with yields plummeting as traders ramped up their expectations for the Federal Reserve to start cutting its main interest rate soon. This rate has been perched at its highest in over two decades for nearly a year.
Wall Street is clamouring for lower interest rates to alleviate the economic strain caused by the soaring costs of borrowing for homes, vehicles, and credit card purchases. However, Fed officials have indicated they need to see “more good data” on inflation before considering any rate changes.
Thursday’s report, indicating softer-than-anticipated price hikes from the previous year for petrol, vehicles, and other consumer goods in June, was interpreted by Wall Street as the positive sign it needed. Post-report, Treasury yields saw an immediate nosedive. The 10-year Treasury yield fell sharply to 4.20% from Wednesday’s 4.28% and April’s 4.70%.
Such significant shifts in the bond market can greatly bolster stock prices. Summing up the day, the S&P 500 dipped by 0.9% closing at 5,584.54. The Dow Jones edged up by 0.1% to 39,753.75, while the Nasdaq composite took a 2% hit, ending at 18,283.41.
In other financial news, US benchmark crude oil rose by $1.03 to $83.65 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used as the international benchmark, increased by 73 cents to $86.13 per barrel. Meanwhile, the euro appreciated to $1.0887 from $1.0865.
