(Bloomberg) — Wall Street’s selloff in tech heavyweights dragged down global markets on Wednesday, as investors cashed in gains from the leaders of the post-April rally.
Europe’s Stoxx 600 dropped 0.1% after closing within a whisker of an all-time high on Tuesday. Technology stocks fell as much as 0.9% before paring the loss. Investors took shelter in defensive sectors, with real estate and utility stocks among the biggest gainers. Asian stocks retreated 0.7%.
In the US, contracts for the Nasdaq 100 retreated 0.3% after the gauge suffered its second-worst drop since April. US Treasuries dropped across the curve, with the 10-year yield rising two basis points to 4.32%. The dollar was little changed.
Investors pared back positions in big tech amid growing concern that the rally since April has advanced too far and too quickly. That momentum will get a further test this week as focus turns to Jackson Hole, Wyoming, where Federal Reserve Chair Jerome Powell is set to speak on Friday with traders firming up bets on a September cut in interest rates.
“As valuations get pushed to a historical high, traders and hedge funds tend to pull back,” said Anna Wu, cross-asset strategist at VanEck in Sydney. “Today’s fall is pre-Jackson Hole caution and profit-taking.”
In the UK, money markets kept wagers on Bank of England interest-rate cuts broadly steady, seeing around a 40% change of a quarter-point cut this year after inflation climbed for a second month in July. The pound rose 0.1%.
Meanwhile, traders are positioning ahead of Powell’s remarks, with Treasury markets treating a quarter-point rate cut next month as a near certainty and pricing in at least one more before year-end.
Investors are waiting to hear whether Powell will validate current market expectations or counter them by stressing that fresh economic data arriving before the next policy meeting could alter the outlook. They’re also scanning for hints about how the Fed foresees the pace of rate cuts extending into next year.
“If we get an indication that they are more inclined to cutting interest rates, that will be more supportive again,” HSBC Head of APAC Equity Strategy Herald van der Linde said in a Bloomberg TV interview.
What Bloomberg Strategists Say…
“The selloff for Nvidia ahead its earnings next week is the biggest factor for global tech investors. Given that Nvidia is coming off a huge rally since April it looks like being a headwind for stocks in the days ahead.”
—Mark Cranfield, MLIV
Corporate News:
Swedish startup Mindler AB has acquired Ieso Digital Health UK for an undisclosed sum as it seeks to build out its footprint in the online therapy market. Xiaomi Corp. intends to sell its first electric vehicle in Europe by 2027, declaring plans to take on Tesla Inc. and BYD Co. globally after gaining traction with its year-old Chinese EV business. SBB, the firm at the center of Sweden’s property crisis two years ago, reported better-than-expected rental income in the second quarter thanks to growth in its residential segment. Temasek Holdings Pte is mulling one of its biggest overhauls in years, potentially reorganizing the firm into three investment vehicles in a bid to boost returns and efficiencies, according to people familiar with the matter. Shares of Chinese pop toy maker Pop Mart International Group Ltd. rose to a record after founder and Chief Executive Officer Wang Ning said the company could easily surpass its annual sales projection and announced plans to launch a new mini Labubu. Some of the main moves in markets:
Stocks
The Stoxx Europe 600 was little changed as of 9:06 a.m. London time S&P 500 futures fell 0.2% Nasdaq 100 futures fell 0.3% Futures on the Dow Jones Industrial Average fell 0.2% The MSCI Asia Pacific Index fell 0.7% The MSCI Emerging Markets Index fell 0.8% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1645 The Japanese yen was little changed at 147.57 per dollar The offshore yuan was little changed at 7.1803 per dollar The British pound rose 0.1% to $1.3505 Cryptocurrencies
Bitcoin was little changed at $113,476.51 Ether rose 0.9% to $4,195.8 Bonds
The yield on 10-year Treasuries advanced two basis points to 4.32% Germany’s 10-year yield was little changed at 2.75% Britain’s 10-year yield was little changed at 4.74% Commodities
Brent crude rose 1% to $66.46 a barrel Spot gold rose 0.2% to $3,323.28 an ounce This story was produced with the assistance of Bloomberg Automation.
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