markets with little momentum today: Asian stocks followed a global sell-off as the dollar held on to gains and optimism lowering interest rates she got weaker.
Europe is set to open lower. At night and Wall Street the S&P 500 fell 0.6% and the 30-share Dow closed less than 0.1% higher in regular trading. The Nasdaq fell more than 1.6%, its worst day since October, led by major tech stocks and a nearly 4% drop Appleafter Barclays downgraded the iPhone maker.
The dollar is still supported by rising government bond yields and therefore keeps pressure on the Japanese yen and the euro. bitcoin rose 0.6% to $45,255, not far from Tuesday’s 21-month high of $45,922.
In the evening Fed minutes for the December meeting and ISM survey of the US manufacturing sector. The closely watched US non-farm payrolls report will be released on Friday. In this context of uncertainty, markets are not taking off and paying attention today 4 essential topics which pose as many risks of weakness and tension as possible.
1. Waiting for Fed news
Doubts are growing that the Fed – but also the ECB – will put it into practice rate cuts discounted by money markets. The central banks they seem reluctant to give up the fight against inflation too soon.
CME’s FedWatch tool suggests a 21.4% chance that US rates will remain steady in March, up from 11.4% on December 29.
Traders then wait for the publication the last minutes of the Fed tonight (Italian time). The tone is expected to be aggressive, according to BMO Capital Markets’ Ian Lyngen.
“A dovish surprise, while unlikely, would have much more shock value to a market that has moved away from taking the Fed at face value in favor of a more skeptical approach.”wrote the strategist.
Friday’s job vacancies and nonfarm payrolls data will also be analyzed for signs of weakness in the labor market.
“If Fed Chairman Powell is right that inflation can slow further without unemployment soaring, then stocks and bonds are justified.”, according to Bloomberg Economics. Kristalina Georgieva, head of the International Monetary Fund, told CNN International that the US economy is “definitely” heading towards smooth landing thanks to the Fed’s “decision” in taming inflation.
2. War in the Red Sea?
Shipping viaIran for a warship in the Red Sea it is his boldest move yet to challenge US forces on a key world trade route and support Houthi militants, whose missiles have disrupted shipping in the past two months.
Tehran’s move raised tensions after The Houthis began attacking the ships which they claimed were run or owned by Israeli companies in an effort to end the military assault on Gaza. Denmark’s Maersk and German rival Hapag-Lloyd said on Tuesday their container ships would continue to avoid the Red Sea after a series of ship attacks blamed on Houthi militants.
Meantime, tensions in the Middle East they intensify. Israel killed the deputy leader of Hamas, Salih al-Aruri, in the Lebanese capital Beirut on Tuesday, Lebanese and Palestinian security sources said, raising the potential risk that the war in Gaza will spread far beyond the territory.
3. China and raw materials
Recent economic surveys underestimate resilience, according to Capital Economics, which highlighted the strength of imports and its own assessment of economic activity consumption of raw materials in China.
The latest factory indicators suggest that the outlook for domestic manufacturers remains fragile. But lower factory prices have so far not dampened China’s appetite for raw material imports, which has remained strong in recent months, partly on expectations that Beijing’s stimulus measures will boost exports.
4. Apple is faltering and suppliers are collapsing
Barclays has The iPhone manufacturer has switched to a lower version out of fear that demand for its products will remain weak in 2024. Downgrading Apple’s stock and lowering its price target to $160 from $161 has implications.
The prospect of weak sales of the iPhone 15 and a likely reduction in demand for the iPhone 16 and other products have convinced experts to be more pessimistic about the giant. The Apple shares closed 3.58% lower in Tuesday’s session.
“We continue to see weakness in iPhone volumes and mix, as well as a lack of recovery in Macs, iPads and wearables”analyst Tim Long explained in a note to clients.
In this climate, Apple suppliers suffered significant losses in today’s Asian session.
The Taiwanese semiconductor company fell more than 2% on Wednesday morning. TSMC is a leading manufacturer of the world’s most advanced processors for companies such as Apple and Nvidia.
Another major Apple supplier, Hon Hai Technology Group, also known as Foxconn, lost 1.33%. Foxconn, based in Taiwan, is the world’s largest electronics contract manufacturer and assembles Apple’s iPhones.
Technology and chip stocks including Samsung Electronics and SK Hynix fell more than 2%, while LG Electronics lost 1.78%.