BNN Bloomberg's closing bell update: June 2, 2023
Equities dropped to session lows in subdued trading as Apple Inc. erased earlier gains in anticipation of a new mixed-reality headset.
The S&P 500 edged lower as both tech and energy stocks pared advances, which had briefly pushed the benchmark index 20 per cent above an October low, the marker of a bull market.
Oil majors Chevron Corp. and Exxon Mobil Corp. slipped after earlier gains on a oil supply cut from Saudi Arabia. Meanwhile, Treasury yields drifted after a report the US services sector nearly stagnated in May.
The Institute for Supply Management’s overall gauge of services unexpectedly fell to the lowest level of the year, offering a less upbeat assessment of the U.S. economy.
A rally in Big Tech and optimism of a pause in interest rate hikes has driven major gains in the S&P 500. However, risks still loom with traders increasingly speculating the Fed will keep rates steady in June, but keep its options open for hikes later on.
JULY FED HIKE SEEN AS MORE LIKELY
“The weakness in the ISM surveys stands in contrast to the recent improvement in the S&P Global PMIs — which are currently consistent with positive GDP growth of about 2 per cent annualised — and is clearly painting a dramatically different picture to May’s employment report,” said Andrew Hunter, deputy chief U.S. economist at Capital Economics.
Taken with regional Fed activity surveys and other hard data, it could mean GDP growth will be barely above zero in the second quarter, Hunter said.
Saira Malik, chief investment officer at Nuveen, said she foresees a mild recession sometime in 2024 as the “growth-dampening effects of tight monetary policy work their way through the economy.”
“With high inflation likely to persist, we think investors would be well-served by allocating to real assets that can provide meaningful inflation protection,” she said, pointing to farmland.
Bitcoin fell after Binance Holdings Ltd. and its chief executive officer were accused of breaking U.S. securities rules.
Safran SA is in talks to acquire an arm of Raytheon Technologies Corp. in a transaction that could value the business at about US$1 billion.
And U.S. regulators revoked emergency authorization for Johnson & Johnson’s Covid-19 vaccine after the company’s Janssen unit requested its withdrawal.
Elsewhere, equities in Europe slid and indexes in Asia were mostly higher.
The Nikkei 225 rose 2.2 per cent to the highest since 1990 as investors bet a weak yen will boost corporate profits. The dollar erased gains against peers. And gold gained.
Key events this week:
- Rate decisions in Australia, Poland, Tuesday
- China forex reserves, trade, Wednesday
- U.S. trade, consumer credit, Wednesday
- Canada rate decision, Wednesday
- EIA crude oil inventory data, Wednesday
- Eurozone GDP, Thursday
- Rate decisions in India, Peru, Thursday
- Japan GDP, Thursday
- U.S. wholesale inventories, initial jobless claims, Thursday
- China PPI, CPI, Friday
Some of the main moves in markets:
- The S&P 500 fell 0.2 per cent as of 3:03 p.m. New York time
- The Nasdaq 100 was little changed
- The Dow Jones Industrial Average fell 0.5 per cent
- The MSCI World index rose 1.6 per cent
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0712
- The British pound fell 0.2 per cent to $1.2431
- The Japanese yen rose 0.2 per cent to 139.63 per dollar
- Bitcoin fell 6.5 per cent to $25,487
- Ether fell 5.3 per cent to $1,804.43
- The yield on 10-year Treasuries was little changed at 3.69 per cent
- Germany’s 10-year yield advanced seven basis points to 2.38 per cent
- Britain’s 10-year yield advanced five basis points to 4.21 per cent
- West Texas Intermediate crude rose 0.4 per cent to $72.03 a barrel
- Gold futures rose 0.4 per cent to $1,977.60 an ounce