Tech Stocks Tumble as BoE Turns Hawkish – Payrolls Up Next
Tech stocks took a nasty dive yesterday, the US Nasdaq closed down 5.5% but had been lower at one point, other stocks were dragged lower with S&P and Dow Jones down by 4.4% and 3.4% respectively. No surprise that Asian markets were lower overnight, particularly South Korea’s tech-heavy Kospi which was down 6% which led Korean authorities to alter collateral rules in an attempt to prevent forced closures. European markets are also opening in the red this morning. Quite what triggered the move isn’t clear although some, including Trump, are putting it down to fears of a crackdown on AI oversight following the Democrat’s midterm election wins.
Yesterday the BoE did increase rates by 25bps to 4%. Catherine Mann, the only dissenter, voted for a 50bps rise. It was a pretty hawkish meeting, with Bailey suggesting that risks of second-round effects have increased materially and another rate rise is likely unless there is a pretty quick end to the Iran war. December is a live meeting although February is still probably more likely. GBP is around 100 pips lower against USD, perhaps more down to equity-related USD moves, with GBPUSD now 1.3400. GBPEUR is off its highs but still in the high 1.19’s, with EURUSD 1.1185. GBP has performed well in the crosses, now 1.9480, 2.4150 and 1.8850 against AUD, NZD and CAD.
In other news, Trump has indicated a ‘big agreement’ will be announced soon between Ukraine, Russia and the rest of Europe. Elections take place in New Zealand this weekend, polls suggest the result could be close and whoever wins will need some sort of support from minor parties to form a government.
In football last night Bournemouth continued their impressive run with a 3-1 win over Sparta Prague while Palace managed a 1-1 draw with Hoffenheim. In the Europa Conference, Brighton maintained their unbeaten record with a win at Getafe. Premier League action this weekend sees Spurs take on Leeds, while struggling Man Utd could slip into the bottom three if they can’t beat Villa and other results go against them.
England’s rugby players take on Australia on Sunday in the Nations Championship, while the F1 season continues at the excellent Interlagos track in Brazil. All in all a pretty good weekend of sport.
Today’s calendar is dominated by the US nonfarm payrolls where a headline of +65k is forecast although from reading a few pieces I’d say the risks are for a higher reading. The unemployment rate is forecast to stay at 4.2%. We’ll have the Canadian employment numbers at the same time, they are hoping for a vast improvement on last month’s headline which came in at -68k, it is likely we see a small positive reading this time. For the records USDCAD is currently 1.4070, up over 100 pips from yesterday, largely down to general USD strength.
We’ve had a busy week with rate announcements, economic data, US elections and equity market declines, but currencies are actually pretty unmoved with GBPUSD and EURUSD now pretty much where they were at this time last week. Of course we do have that US employment data and another US equity market session to contend with before we can settle down. Next week isn’t quite as busy on the calendar but we will have US CPI and PPI inflation data and the UK’s first Q3 GDP estimates.
Have a great day, and a great weekend as and when it comes…
- 09.30 ECBs Lane speaks
- 10.00 EU retail sales
- 13.30 US nonfarm payrolls
- 13.30 CAD employment
- 15.00 US Michigan sentiment survey
- 15.00 CAD Ivey PMI
- 16.00 BoJs Ueda speaks
- 17.15 Feds Bowman speaks