(Bloomberg) – Global stocks continued to fall from the records as a multitude of concerns over earnings, valuations, coronavirus trends and the impact of frenzied retailing across parts of the U.S. market. The dollar rose.
The Stoxx Europe 600 index slumped on the stock market as investors pondered the bottom line of chip maker STMicroelectronics NV and Diageo Plc after a failure of Swatch Group AG and a drop in sales at EasyJet Plc. An ongoing dispute between AstraZeneca Plc and the European Union over vaccine supplies to the region also weighs on sentiment.
US stock futures fell after Apple Inc. and Tesla Inc. results disappointed and stocks slipped below the market. On Wednesday, the S&P 500 plunged 2.6% in its worst since October, as retailers clustered in sharply shortened businesses, sparked losses in hedge funds, and caused turmoil in parts of the market.
Government bond yields fell to 1% after Federal Reserve officials left their main interest rate unchanged and clarified that the central bank was nowhere near massive support for the economy. Stocks in Hong Kong and Australia saw the majority of Asian losses.
Stocks stumbled after a prolonged rally that spurred discussion of potential asset bubbles and predictions of a retreat amid a raging pandemic and patchy vaccine rollout. Adding to investor concern is a surge of retailers offering heavily discounted stocks and whipping stocks around the globe.
“The combination of brief coverage in the US equity markets and delays in vaccine distribution has caused the US and European equity markets to decline by 2-3%,” said Sebastien Galy, macro strategist at Nordea Funds. “One important point is that a cautious Fed has still not been able to turn the market around, a signal that this could take a few days.”
Why GameStop Furor Hurt Stock Markets
The increasing volatilities are forcing investors to reduce leverage and that means a large amount of cash is leaving the market. Big institutional names lose a lot of money very quickly. The stock market game has changed radically in the past week. This increases uncertainty and makes risk managers very nervous.
Mark Cudmore, Bloomberg Macro Strategist.
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Here are some key events coming up over the coming week:
Fourth quarter GDP, initial jobless claims and new home sales are among the US data released Thursday. personal income, expenses, and pending home sales come Friday.
These are the main movements in the markets:
Futures on the S&P 500 Index fell 0.3% from 8:20 a.m. London time. The Stoxx Europe 600 Index fell 1%. The MSCI Asia Pacific Index fell 1.9%. The MSCI Emerging Market Index fell 1.7%.
The Bloomberg Dollar Spot Index gained 0.2%. The euro fell 0.1% to $ 1.2103. The British pound was down 0.2% to $ 1.3655. The onshore yuan gained 0.1% to $ 6.478 per dollar. The Japanese yen was down 0.2% to $ 104.28 per dollar.
The 10-year government bond yield fell one basis point to 1.01%. The yield on two-year government bonds was unchanged at 0.12%. Germany’s 10-year yield fell less than one basis point to -0.55%. Britain’s 10 year yield fell 1 basis point to 0.262%. Japan’s 10-year return fell one basis point to 0.04%.
West Texas Intermediate Crude Oil fell 0.7% to $ 52.48 a barrel. Brent crude fell 0.6% to $ 55.48 a barrel. Gold weakened 0.2% to $ 1,839.86 an ounce.
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