Global markets were calmer overnight, and sentiment improved further as the Bank of Japan indicated that it wouldn’t raise interest rates in the country in a period of market turbulence. However, US banking giant JP Morgan warned yesterday that in its opinion the unwind of the yen carry trade is only halfway through, so there could yet be more volatility to come.
US markets
USD/JPY is trading at ¥146.55 ahead of the London open, and US 10-year Treasury bonds are yielding a fraction over 3.90%. That said, the CBOE VIX index, which captures the volatility within S&P 500 stocks via the options market, fell back to a reading of 27.71%, having printed north of 65.0% on Monday.
The Nasdaq 100 finished Tuesday's session up by just over 1%. However, it's clear that the market is not in a forgiving mood. Super Micro Computer reported earnings after the close last night. The server manufacturer disappointed the market on margins, which contracted sharply. The company has had a stellar run in 2024, but its stock price fell by 13% in post-market trading.
SMCI was not the only earnings disappointment yesterday. Airbnb fell 16.64% as it announced a slowdown in rentals among its US customers. Those numbers contrasted with the figures from hotel group IHG, which saw its first-half revenues rise by 4%, helped in part by a pick-up in the US.
European markets
Technology names led the field in the Euro STOXX 50 yesterday, with ASML up by 4.57% and database group SAP adding 2.31%. However, the life science and speciality chemicals group Bayer continues to suffer, falling by more than 6% yesterday. The German industrial giant has now lost 51.66 % in the last year, and has become something of a poster-boy for the problems confronting German corporations since the pandemic and the Russian invasion of Ukraine.
In the FTSE 100, engineer Melrose bounced back, rallying 6.64%. Rolls-Royce also made strong gains, up by 5.57%, and the tech-heavy Scottish Mortgage Investment Trust added 4.95%. The big losers on the day were Rightmove, which was down by 4.34%, silver miner Fresnillo which slipped by 3.09%, and gaming group Entain, which fell by a similar percentage.
CFDs on US and European equity indices traded higher on the London open. The S&P 500 is up 0.57%, the Nasdaq is 0.59% higher, and the DAX is up 0.45%. The Italian MIB printed 0.80% higher on the open but has since slipped back, while the FTSE 100 has gained 0.64% in early trade.
Both Brent and WTI Crude are trading modestly lower on the day, while gold has added 0.38% this morning, though it remains down by more than 2% over the last week.