Item 1 of 3 Bull statues are placed in font of screens showing the Hang Seng stock index and stock prices outside Exchange Square, in Hong Kong, China, August 18, 2023. REUTERS/Tyrone Siu
Wall Street dived overnight as jitters over inflated tech stock prices returned, resulting in the Nasdaq’s widest one-day swing since April 9 when President Donald Trump’s “Liberation Day” tariffs spooked markets.
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Treasury yields fell as futures moved to imply a 40% probability of a U.S. rate cut in December, up from 30% a day earlier, but with the next payrolls numbers available only after the Fed meeting investors remained unconvinced of an easing next month.
“The markets had plenty to be positive about and initially Nvidia’s banging quarterly results meant Wall Street burst out of the gates. The U.S. jobs data was probably as good as you could have hoped for too,” said Kyle Rodda, a senior analyst at Capital.com.
“However, the momentum simply was not there to carry the rally through, with the passing of two critical risk events – both with positive outcomes, no less – not enough to kill the bearishness gripping the markets currently.”
STILL CAUTIOUS FED
Cleveland Fed President Beth Hammack warned that cutting rates further right now carries a wide range of risks for the economy. Fed Governor Lisa Cook sees a risk of outsized asset price declines.
In the currency markets, the dollar jumped on the risk-sensitive commodity currencies, hitting a three-month high on the Aussie and a fresh seven-month top on the kiwi , although the two Antipodeans steadied a little on Friday.
Earlier in the day, data showed Japan’s core consumer prices rose 3% in October, keeping alive expectations of a near-term interest rate hike.
Treasuries steadied after gaining overnight. Two-year Treasury yields were flat at 3.554%, having fallen 4 basis points overnight, while the 10-year yield was little changed at 4.098%, after easing 3 bps in U.S. trading hours.
Oil prices extended the overnight slide on Friday as the U.S. government pushed for Ukraine’s acceptance of a peace agreement with Russia. U.S. West Texas Intermediate crude dropped 1% to $58.38, and was down 2.8% this week.
Spot gold prices were off 0.2% to $4,069 per ounce, having been little moved overnight.
Reporting by Stella Qiu
Editing by Shri Navaratnam
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