Tech stocks were in retreat as Oracle Corp. posted slowing cloud sales, while the euro and pound weakened on concern the Europe faces a growing threat of stagflation.
(Bloomberg) — Tech stocks were in retreat as Oracle Corp. posted slowing cloud sales, while the euro and pound weakened on concern the Europe faces a growing threat of stagflation.
Nasdaq 100 Index futures slipped 0.3%, signaling the index will pare yesterday’s 1.2% rally. In Europe, packaging company Smurfit Kappa Group plunged 13% after it announced a deal to combine with WestRock Co.
Tech stocks are set to be the center of attention on Tuesday, with Apple Inc. preparing to announce a new product lineup and SoftBank-owned chip designer Arm Ltd. gearing up for the biggest initial public offering of the year. Meanwhile, Oracle put a spotlight on the risks of investing in high-flying tech shares.
Oracle sank 10% in premarket trading, with Morgan Stanley analysts saying the results raise questions about the timing of generative AI demand turning into revenue across the broader business.
In Europe, the euro and the pound both traded around 0.4% lower against the dollar. UK wage growth held at a record high in the three months through July, a sign of persistent inflation that will keep pressure on the Bank of England to raise interest rates again. Investor confidence in Germany’s economy improved for a second month, while lingering at a level that will do little to dispel intensifying concerns over the country’s status as Europe’s growth laggard.
US inflation data are due Wednesday and the European Central Bank holds its interest-rate decision on Thursday.
“Markets are gearing up to this week’s main events,” wrote ING Group NV strategists including Benjamin Schroeder. “It is not just about this Thursday’s ECB meeting, but also about crucial data in the US and UK ahead of next week’s respective central bank meetings.”
US consumers’ inflation expectations were mostly stable in August, but households grew more concerned about their finances and more pessimistic about the job market, according to a Fed Bank of New York survey.
The consumer-price index report Wednesday will provide the latest insight into how much further the Fed may need to go to pull inflation back toward its target. Monthly inflation is expected to accelerate to 0.6% in August, while core is seen stable at 0.2%, according to economists’ estimates.
“If we do see potentially a more sticky inflation number than the 0.6% expected by economists or 0.2% on core, I would expect to see the bond market start to potentially price in another rate hike before the end of the year, potentially as early as November,” Anthony Doyle, head of investment strategy at Firetrail Investments Pty Ltd, said on Bloomberg Television.
Stocks in Asia fluctuated and Chinese shares were back in the red. Gains triggered by news on Country Garden Holdings Co. — which secured payment extension approval from its bondholders — were not enough to keep the positive sentiment going for long.
In currencies, the yen fell and the greenback steadied after falling by the most in two months. The yuan was little changed after China’s central bank set its daily fixing rate at below 7.20 versus the dollar, another sign that it won’t tolerate excessive yuan weakness.
The Japanese government saw solid demand during the auction of its five-year bond Tuesday, with a higher-than-expected cut-off price. The sale was the first since central bank Governor Kazuo Ueda jolted markets with comments on the negative interest rate policy.
In commodities, oil edged up, trading near the highest level this year before reports that may offer further insight into the market’s balances. Gold was little changed.
Key events this week:
- Apple set to unveil iPhone 15 line and next-generation smartwatches at “Wonderlust,” its biggest product-upgrade event of the year, Tuesday
- Japan PPI, Wednesday
- Eurozone industrial production, Wednesday
- UK industrial production, Wednesday
- US CPI, Wednesday
- Tech leaders including Tesla’s Elon Musk and Meta Platforms’ Mark Zuckerberg are set to attend a forum on the future of AI convened by Senator Chuck Schumer, Wednesday
- Japan industrial production, Thursday
- European Central Bank policy meeting and news conference by President Christine Lagarde, Thursday
- US retail sales, PPI, business inventories, initial jobless claims, Thursday
- China property prices, retail sales, industrial production, Friday
- US industrial production, University of Michigan consumer sentiment, Empire Manufacturing index, Friday
Some of the main moves in markets:
- The Stoxx Europe 600 was little changed as of 1:24 p.m. London time
- S&P 500 futures fell 0.2%
- Nasdaq 100 futures fell 0.3%
- Futures on the Dow Jones Industrial Average fell 0.1%
- The MSCI Asia Pacific Index was little changed
- The MSCI Emerging Markets Index fell 0.3%
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.4% to $1.0706
- The Japanese yen fell 0.4% to 147.14 per dollar
- The offshore yuan fell 0.1% to 7.3114 per dollar
- The British pound fell 0.4% to $1.2460
- Bitcoin rose 4.2% to $26,149.61
- Ether rose 4.3% to $1,608.26
- The yield on 10-year Treasuries was little changed at 4.28%
- Germany’s 10-year yield declined one basis point to 2.63%
- Britain’s 10-year yield declined four basis points to 4.43%
- Brent crude rose 0.7% to $91.30 a barrel
- Spot gold fell 0.7% to $1,909.57 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jason Scott and Masaki Kondo.
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