Euro extends gains, NASDAQ tumbles again
The euro is higher again as Christine Lagarde – the European Central Bank president - said she is attentive to the exchange rate. Yesterday, Ms Lagarde, gave a strong suggestion the central bank might hike rates in the next month few months. This came at a time when other eurozone central bankers indicated that rates might be hiked in July. The euro is showing strong gains, against the US dollar, the British pound, and the Australian dollar. EUR/USD is trading comfortably above the 1.0700 mark, and it hit a one-month high.
Once again, the US technology sector is leading the fallers. The NASDAQ is down more than 3%, while the S&P 500 is 2.2% lower. Snap Inc, the social media group, issued a disappointing update last night, and now the shares are down 41%, which is weighing on the sector, as Meta Platforms and Twitter shares are nursing losses too. Snap cautioned that quarterly revenue and earnings will come in below the lower end of their previous guidance. In a sign the group is looking to tighten its belt, the firm will slow the pace it takes on new staff – this sent out a message of uncertainty.
In a strange turn of events, the painful losses on stock markets are pushing down yields, as bonds are in increased demand. Keep in mind, it was the rise in yields that set-in motion the recent downward move in stocks. The US 10-year yield fell to 2.73%, its lowest level since late April.
Gold and silver are reaping the benefits of the weaker US dollar. Also helping the assets is the flight-to-quality strategy as funds are being re-directed from equities to precious metals. Gold hit its highest mark in almost three weeks. It is a different story with respect to industrial metals like copper as fears persist about the health of the global economy. The flash manufacturing PMI reading for the eurozone cooled to 54.4, its slowest pace of expansion in 16 months – this adds to the worries about a slowdown in activity.
