Darren Sinden from educational provider Trade Uni discusses the latest market moves.
Equity markets finally reacted yesterday after weeks of overlooking rising treasury bond yields, overnight rates, and rallies in gold and the dollar index. Whether spurred on by concerns over US debt and deficits or worries about potential US inflation sparked by continued government spending, equity traders headed for the exit, though they were top-slicing holdings rather than selling everything.
Traders seem to have been focused on the US election rather than the macro background and market internals. Tech stocks were the hardest hit, with the Nasdaq 100 down 1.6%. Nvidia slipped by 2.81% but had traded lower on the day. Chip designer Arm Holdings fell by 6.67%, Plato Alto Networks by 4.8%, Qualcomm by 3.8% and Broadcom by 3.27%. There were gainers in the Nasdaq 100 - Texas Instruments rallied by 4%, and Baker Hughes was up by 2.83% - but they were thin on the ground. In the S&P 500, which closed down 0.92%, the biggest loser was Enphase Energy, which slumped by almost 15%. Memory manufacturer Seagate Technology fell by 8.1% and McDonald’s was off by 5.1% on concerns about an E. coli infection in some of its products, which has led to multiple hospitalisations and possibly one death.
Overall volumes were on the low side away from the stocks mentioned above. For example, Apple traded 30% more than its daily average volume, though that seems after modest excess given its weighting, presence in large-cap ETFs, and underlying index moves. Tesla reported earnings after the close which surprised on the upside; investors liked what they saw, and the stock price jumped by more than 12% in post-market trading, causing CFDs on the Nasdaq 100 to trade up by 0.5% in Europe this morning. European equities had a more measured session, with the Euro Stoxx 50 falling by 0.3% and the broader-based Stoxx 600 index falling by 0.6%. The biggest loser at an index level in Europe was the Dutch AEX which lost 0.8%, led lower by a 3.5% drop in Akzo Nobel, a 2.5% loss in Randstad and a 2.3% fall in Unilever despite gains at Just Eat and Heineken.
Oil is another mover in Europe this morning with Brent and WTI up by more than 1%. Gold has added 0.49%, silver 0.96%, and copper a similar amount. For its part, the dollar index is off the top but still trades above 104, GBP/USD is below $1.30 on comments from Bank of England governor Andrew Bailey stating that UK inflation is falling faster than anticipated - which in the mind of traders opens the way to further UK rate cuts. US 10-year treasury bond yields seem to have flattened out at 4.216% this morning, while the closely watched US 30-year mortgage rate finished yesterday at 7.26%, just a shade under their three-month high of 7.27%.
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