A look at the day ahead in European and global markets from Rae
Wee
An ugly selloff in technology stocks swept across Asia on
Monday as investors slammed the brakes on the red-hot AI rally,
with a more than 8% fall in South Korea's KOSPI triggering
circuit breakers.
The moves followed that of last week's shakeout on Wall
Street, after a blowout U.S. jobs report ramped up expectations
for Federal Reserve interest rate hikes - a bane for growth
stocks.
Markets are now pricing in a more than 70% chance that the
Fed will raise rates in December, up from a 45% chance a week
ago, according to the CME FedWatch tool.
Friday's nonfarm payrolls report came just days after
Broadcom's ( AVGO ) underwhelming results last week, which sent
its stock slumping and dragged share prices of other technology
companies lower.
But that's the price to pay for perfection - when
expectations run so high, even a small miss can deliver a huge
blow.
Analysts and investors have, for the most part, dismissed
the latest selloff as a "healthy correction", with concentration
risks and leveraged positions amplifying the market moves,
though it remains to be seen how long the rout will last.
Elsewhere in markets, the dollar was at a two-month
high, helped by the Fed hike bets and resilience in the U.S.
economy.
The resurgent dollar pushed the yen deeper into
intervention territory, leaving investors on alert for further
yen-buying action from Tokyo to stem the currency's slide.
Revised gross domestic product data on Monday showed Japan's
economy lost momentum in the January-March quarter from the
previous three months on sluggish capital expenditure.
The data calendar for Monday is light, though the week ahead
is headlined by the giant SpaceX listing and U.S. inflation
data, alongside a European Central Bank policy meeting.
And the war in the Middle East rages on, with Israel saying
it struck military targets in western and central Iran on
Monday, even after U.S. President Donald Trump reportedly told
Israeli Prime Minister Benjamin Netanyahu to refrain from
further attacks.
Key developments that could influence markets on Monday:
- Boeing ( BA ) to release May numbers for deliveries and
orders
- Global airline CEOs gathering for an event in Rio de
Janeiro
- France: Reopening of 3-month, 4-month, 6-month and
11-month government debt auctions
- Germany: Reopening of 5-month and 11-month government debt
auctions
(Editing by Sonali Paul)