DOW FLAT AND EUROPE SELL OFF CONTINUE
The 3 main US stock indexes were around the flatline on Thursday, attempting to rebound from a big Fed fallout in the previous session. The tech sector remains under heavy pressure as Treasury yields continue to soar after the latest FOMC minutes increased expectations the Fed will raise rates soon, which could hurt the highly valued technology stocks. Investors also appear to rotate to other sectors, namely the ones that benefit from strong economic growth. Meanwhile, the claims report continued to point to a tight labour market and all eyes now turn to the payrolls report due tomorrow although it is not expected to change market perceptions. On the corporate front, Travelers Companies (1.3%) was one of the best performers in the Dow while Walgreens sank 2% despite upbeat earnings.
European stocks fell from records on Thursday amid a global selloff in technology shares and bonds, as investors digested the minutes of the US Federal Reserve policy meeting, while remaining concerned about a spike in coronavirus infections and rising inflation. Fed officials agreed that it might be needed to raise interest rates sooner than expected, as well as to reduce the central bank’s overall asset holdings, voicing concerns over persistent high inflation against a backdrop of an improving labor market outlook. Among single stocks, catering group Sodexo beat first-quarter revenue forecast as schools reopened. Frankfurt's DAX 30 lost more than 1% to 16,100 in early trading, while other major European bourses fell between 0.9% and 1.4%.
The FTSE 100 dropped nearly 1% to 7,450 on Thursday, after touching a near two-year high in the previous session and following a global selloff in equity markets, amid interest rate hike expectations and concerns over the impact of Omicron coronavirus on the economy. On the corporate front, clothing retailer Next beat guidance for sale and raised its profit outlook.
The CAC 40 Index fell 1.3% to hover around 7,280 on Thursday, after reaching the record high of 7,385 on the last session, amid the outlook of higher interest rates and coronavirus infection spikes. Following yesterday’s session, the release of the FOMC meeting minutes indicated policymakers are ready to aggressively dial back stimulus and normalize monetary policy, maintaining the outlook for three policy rate hikes in 2022. On the pandemic front, France registered over 330 thousand cases in the last 24 hours, the highest ever in a European country, as the government and health authorities stress the importance of vaccines. On the corporate front, tech shares fell 2.6%, led by Capgemeni (-3.8%) and Dassault Systemes (-2.7%). Less optimistic expectations on the economy also hit luxury goods stocks, as seen in LVMH (-2.4%) and Hermes (-2.5%).
The FTSE MIB Index was 1.3% lower to hover around 27,790 on Thursday, falling from the 13-year high of 28,212 touched yesterday and tracking a global equity sell-off, as investors weighed on the minutes from yesterday’s FOMC meeting and new coronavirus related restrictions. On the pandemic front, the Italian government made the Covid vaccine mandatory for all individuals over 50 years old, in an attempt to alleviate pressure on hospitals after. Cases in the last 24 hours topped 189 thousand for a new record. On the corporate front, technology and luxury goods shares took the biggest losses, led by Moncler (-2.3%) and STMicroelectronics (-1.8%).
