US equities weakened as tech stocks lurched lower, Treasuries were mixed. Traders are waiting on the minutes from the Federal Reserve’s last meeting.
(Bloomberg) — US equities weakened as tech stocks lurched lower, Treasuries were mixed. Traders are waiting on the minutes from the Federal Reserve’s last meeting.
The tech-heavy Nasdaq 100 fell 0.6% to trade at its lowest in more than a month while gains in the S&P 500 petered out on volume that was 18% below the 30-day average at this time of day. Progressive Corp. and Berkshire Hathaway Inc. staved off losses in the broader benchmark after Progressive’s net premiums written rose in July. Target Corp. jumped on a strong profit rebound at the retailer.
US Treasuries were mixed with benchmark 10-year Treasuries hovering around 4.2%. Traders are closely watching the minutes of the July FOMC meeting due to be released later Wednesday.
“With a softer payrolls and inflation read revealed since the meeting, expect that the odds of a September hike will continue to wane,” said Ian Lyngen, a strategist with BMO Capital Markets. Still, he added “a willingness to continue tightening if needed will leave the door firmly open for another hike if the data warrants.”
Among currencies, the pound led Group-of-10 peers after UK inflation topped expectations. Meanwhile, China’s economic woes remain in the spotlight, despite a slew of stimulus steps by authorities. The onshore yuan sank against the dollar while the yen fell to a level that triggered Japan’s intervention in September.
Read more: Yen Touches Level That Triggered the First Intervention of 2022
China’s central bank moved to boost fragile sentiment with a stronger-than-expected reference rate for the yuan and the largest injection of short term cash to the financial system since February. So far the steps have failed to restore optimism and market moves suggest traders are looking for more aggressive supportive measures.
Markets are not yet fully reflecting the risks from deteriorating fundamentals in China, according to Tiffany Wilding, an economist and managing director at Pacific Investment Management Co.
“Given the usual lags, deflationary spillovers have likely only just begun to impact global consumer markets,” Wilding wrote in a note to clients. “Discounting likely to accelerate over the coming quarters.”
Hot wage figures and US retail statistics had rattled markets on Tuesday, spurring bets tight central bank policy will be in place for longer. Minneapolis Fed President Neel Kashkari warned that inflation was “still too high.”
Corporate Highlights:
- London-listed BAE Systems Plc is in talks on a possible acquisition of Ball Corp.’s aerospace division, people with knowledge of the matter said.
- Intel Corp.’s $5.4 billion deal with Israel’s Tower Semiconductor Ltd. collapses after failing to win Chinese regulatory approval in time.
- Energy Transfer LP will buy Crestwood Equity Partners LP in a $7.1 billion all-equity deal allowing Energy Transfer to expand its US pipeline network.
- Target Corp. climbs after a surprising profit surge in the second quarter overshadows the company’s increasingly cautious outlook on the rest of the year.
Key events this week
- US FOMC minutes, housing starts, industrial production, Wednesday
- US initial jobless claims, US Conf. Board leading index, Thursday
- Eurozone CPI, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 fell 0.2% as of 12:23 p.m. New York time
- The Nasdaq 100 fell 0.6%
- The Dow Jones Industrial Average was little changed
- The MSCI World index fell 0.5%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.1% to $1.0893
- The British pound rose 0.3% to $1.2737
- The Japanese yen fell 0.2% to 145.84 per dollar
Cryptocurrencies
- Bitcoin fell 0.7% to $28,967.08
- Ether fell 0.6% to $1,816.36
Bonds
- The yield on 10-year Treasuries advanced two basis points to 4.23%
- Germany’s 10-year yield declined two basis points to 2.65%
- Britain’s 10-year yield advanced six basis points to 4.65%
Commodities
- West Texas Intermediate crude fell 0.7% to $80.42 a barrel
- Gold futures fell 0.2% to $1,931.50 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Alex Nicholson.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.