The Stock Market Is Cracking as Investors Flee to Bonds

2 months ago 14

Updated July 8, 2021 6:21 americium ET / Original July 8, 2021 5:32 americium ET

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A wide presumption shows the National Stadium, main venue for the Tokyo 2020 Olympic and Paralympic Games, successful Tokyo connected July 8, 2021.

AFP via Getty Images

Global stocks slumped portion the enslaved rally continued connected Thursday, connected jitters astir however the system would execute without arsenic overmuch fiscal and monetary stimulus adjacent twelvemonth arsenic good arsenic the lingering coronavirus that is denting reopening hopes.

Futures connected the Dow Jones Industrial Average fell 436 points, oregon 1.3%, portion S&P 500 futures dropped 1.2%, and Nasdaq Composite futures declined 1.3% aft some closed astatine grounds highs connected Wednesday. The 10-year U.S. Treasury output slumped 0.06 percent constituent to 1.261%.

“While stocks person been connected a tear, hitting all-time highs past month, the temper successful the markets is starting to sour,” writes Oanda’s Sophie Griffiths.

The Nikkei 225 mislaid 0.9% successful Tokyo, wherever investors had to see the quality the Olympics volition apt beryllium held without spectators arsenic Japan declared a caller authorities of exigency until precocious August owed to the dispersed of coronavirus.

The Hang Seng mislaid astir 3%, with tech stocks including Alibaba and Tencent retreating amid China’s tightening regulatory regime.

But the diminution was dispersed crossed each large markets. The Stoxx Europe 600 fell much than 1% aft ending Wednesday astatine its second-highest level ever.

“Market interest astir the microorganism tin beryllium seen successful the comparative show of sectors that payment from reopening the economy, specified arsenic airlines and hotels. Those sank yesterday adjacent portion the wide markets rose,” said Marshall Gittler, caput of concern probe astatine BDSwiss Holding.

It was the archetypal accidental for overseas investors to respond to the latest minutes coming from the U.S. Federal Open Market Committee, which showed part connected the timing for reducing the complaint of enslaved purchases. That didn’t travel arsenic a astonishment since officials person been airing their disparate views successful public. “Overall, the Fed is struggling to signifier a statement connected the absorption of the plus acquisition program,” said Tim Duy, main U.S. economist astatine SGH Macro Advisors.

The European Central Bank meantime is going to denote the results of its strategy review, successful which the cardinal slope is expected to determination from targeting ostentation beneath but adjacent to 2%, to a symmetric 2% target, which is successful enactment with different cardinal banks. The announcement is acceptable for 1 p.m. section time, oregon 7 a.m. Eastern, followed by a property league with ECB President Christine Lagarde.

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