Stocks Slip as Traders Trim Risk Before Weekend: Markets Wrap
(Bloomberg) — Stocks slipped as traders reduced their exposure ahead of the weekend, with the fragile truce in the Middle East keeping geopolitical risk front of mind.
S&P 500 futures dipped 0.1% after a rally in chipmakers drove the benchmark to the highest since mid-June. Europe’s Stoxx 600 was little changed and remained on track for its first weekly loss in five. SK Hynix Inc. dipped 0.3% in Seoul before the memory maker’s US debut.
Oil prices eased after a volatile stretch. Brent fell 0.4% to around $76 a barrel as talks between the US and Iran carried on despite two days of fighting that drove a steep drop in traffic through the Strait of Hormuz. The risk of further escalation is expected to keep investors cautious as they close out the week.
“Over the weekend, discussions between the US and Iran are expected to continue,” said David Manso, chief investment officer at CaixaBank AM. “Oil prices could provide a useful gauge of investor sentiment and expectations regarding the evolution of the situation.”
The dollar fell 0.1% in a third straight day of losses. Bonds extended a rebound, with the yield on 10-year Treasuries falling two basis points to 4.53%. The yen outperformed all major currencies, rising 0.3% after Japanese Finance Minister Satsuki Katayama said the government wants pension funds to increase investment in domestic assets.
While geopolitics are keeping sentiment in check for the time being, the focus will soon shift when the second-quarter earnings season gets into full swing next week. Strong forecasts have pushed artificial intelligence infrastructure suppliers to the forefront, fueled by the massive spending of hyperscalers.
After an unprecedented rally in chipmakers and other AI buildout stocks helped markets shrug off higher oil prices and elevated bond yields, the bar is now high for companies to justify their lofty valuations. For hyperscalers, the onus is on proving that the spending can generate strong returns.
“What remains to be confirmed is whether growth can hold up despite that pressure, with the AI capex cycle continuing to support investment, revenues and earnings,” said Florian Ielpo, head of macro at Lombard Odier Investment Managers. “Expectations are high, but the real test is whether earnings can keep validating the expansion story.”
SK Hynix’s debut may set the tone for US markets on a day with no significant data releases or central bank officials scheduled to speak. The firm raised $26.5 billion in an offering of American depositary receipts, which begin when-issued trading on the Nasdaq Global Select Market.
Corporate News:
Shein Group Ltd. is moving ahead with preparatory work for a possible Hong Kong initial public offering, people familiar with the matter said, potentially capping a yearslong effort by the fast-fashion giant to go public. EasyJet Plc received a fresh offer from private equity firm Apollo Global Management for 715 pence a share that beats a rival proposal from Castlelake LP. French billionaire Xavier Niel has agreed to buy a stake in Vodafone Group Plc from Emirates Telecommunications Group Co. for about $6 billion to become the biggest shareholder in the British telecommunications company. Bayer AG sold a minority stake in its contraceptives business to Apollo Global Management Inc. for €3 billion ($3.4 billion). Volkswagen AG plans to cut its sprawling model lineup by as much as half, part of a savings push that fell short of expectations for progress on deeper workforce reductions and plant closures in Germany. Some of the main moves in markets:
Stocks
The Stoxx Europe 600 was little changed as of 10:58 a.m. London time S&P 500 futures were little changed Nasdaq 100 futures fell 0.4% Futures on the Dow Jones Industrial Average were little changed The MSCI Asia Pacific Index rose 0.8% The MSCI Emerging Markets Index rose 0.8% Currencies
The Bloomberg Dollar Spot Index fell 0.1% The euro was little changed at $1.1429 The Japanese yen rose 0.3% to 161.82 per dollar The offshore yuan rose 0.3% to 6.7790 per dollar The British pound was little changed at $1.3411 Cryptocurrencies
Bitcoin rose 1.7% to $64,359.5 Ether rose 2.5% to $1,791.91 Bonds
The yield on 10-year Treasuries declined two basis points to 4.53% Germany’s 10-year yield declined two basis points to 3.06% Britain’s 10-year yield declined three basis points to 4.87% Commodities
Brent crude fell 0.3% to $76.07 a barrel Spot gold fell 0.4% to $4,105.29 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Subrat Patnaik.
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