A four-day slide in global stocks deepened as concerns over lofty valuations and mixed signals from Federal Reserve officials on interest rates sapped investor sentiment. The MSCI All Country World Index declined 0.1% in the longest losing streak in a month. Asian shares fell 0.8%, the most in September, with drug companies slumping after President Donald Trump announced a 100% levy on branded or patented pharmaceutical products. S&P 500 futures were little changed while Nasdaq 100 futures dropped 0.1%. Contracts for Europe rose 0.4%.
The Trump administration is also weighing a plan to slash the US’s reliance on semiconductors made overseas, the Wall Street Journal reported. A Bloomberg gauge of the dollar held near the three-week high, heightening focus on the Fed’s preferred inflation gauge which is due for release Friday. After a $15 trillion rebound in global equities from April’s lows, traders now face a wall of uncertainty as tariff headlines return to unsettle markets. The Fed’s next policy move, the upcoming earnings season, and the threat of a US government shutdown are also weighing on sentiment. Attention now turns to Friday’s inflation report after strong US GDP data complicated the outlook for further rate cuts.
Following the rally, the S&P 500’s 12-month forward price-to-earnings ratio recently touched a high of 22.9, a level that this century was exceeded in just two prior instances: the dot-com bust and the pandemic rally in the summer of 2020 when the Fed reduced rates to near zero.
A Bloomberg gauge of the so-called ‘Magnificent Seven’ fell almost 1% Thursday. Global investors are also reducing chip stocks in South Korea following their hefty gains this month, said Huh Jae-Hwan, an analyst at Eugene Investment & Securities. Samsung Electronics Co. fell over 4%, its first decline in five days, while SK Hynix Inc. slipped over 5%. Money markets slightly reduced bets on rate cuts after the GDP data, projecting about 40 basis points of Fed reductions before the year is over. Divisions within the Fed over the path of rates added to the uncertainty. Fed Governor Stephen Miran said the US central bank risks damage to the economy by not moving rapidly to lower interest rates, dissenting against the decision to lower rates last week by a quarter percentage point, favoring a half-point cut. Michelle Bowman said inflation is close enough to the central bank’s target to justify more rate cuts because the job market is weakening. Fed Bank of Chicago President Austan Goolsbee expressed continued concern about tariff-driven inflation and pushed back against any call for “front-loading” multiple rate cuts. His Kansas City counterpart Jeff Schmid signaled the central bank may not need to cut again soon. Fed Bank of Dallas President Lorie Logan said the US central bank should abandon the federal funds rate as its benchmark in implementing monetary policy, and consider an overnight rate tied to the more robust market for loans collateralized by US Treasuries. Investors will now turn their focus to Friday’s inflation data. The Fed’s preferred gauge of underlying inflation likely grew at a slower pace last month, offering policymakers some breathing room to address jobs cooling. A report on Friday is forecast to show the personal consumption expenditures price index excluding food and energy rose 0.2% in August, compared with 0.3% in July. On an annual basis, the so-called core measure is seen holding at a still-elevated 2.9%. In other corners of the market, oil headed for its biggest weekly gain in more than three months as Trump increased pressure on buyers of Russian energy. Gold traded just below a record — on track for a sixth weekly gain. US After Hours COST -0.7% modestly lower on earnings; CNXC -21.6%, LGCY -12.9%, LPTH -6.9% lower on earnings; CRNX halted, but FDA approves PALSONIFY for acromegaly.
Nikkei -0.61% Hang Seng -0.39% CSI -0.24% Shanghai -0.15% Shenzen -0.78%
Eur$ 1.1680 CNH 7.1413 CNY 7.1327 JPY 149.65 GBP 1.3354 CHF 0.7992 RUB 83.9633 TRY 41.5677 WTI$ 65.21 +0.35% Gold 3;747.5 -0.05% BTC 109,400 +0.19% ETH 3,948 +1.54%
S&P -0.03% Nasdaq -0.10% EuroStoxx +0.40% FTSE +0.22% Dax +0.27% SMI -0.09%
Macro :
- Goldman President Criticizes Barriers to Migration Amid H-1B Row
- US Approves Possible $1.23b Military Sale to Germany
- Trump Takes Aim at Chip Makers With New Plan to Throttle Imports -- WSJ
- Germany’s new deregulation chief vows to be more subtle than Elon Musk
- US Version of TikTok Will Be Valued at $14b, Vance Says
- Trump Plans New Tariff Push With 100% Rate on Patented Drugs
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