U.S. Stocks Fall Sharply; Euro Strengthens Against the Dollar

The shift in tone from central banks in Europe and the U.S. continued to drive financial markets, with stocks and bonds selling off and currencies from the euro to the loonie padding gains versus the dollar.

The U.S. technology sector’s woes deepened as renewed selling in the year’s biggest winners sent software and chipmaker shares to the lowest in seven weeks. Investors rotated into banks after the Federal Reserve cleared them to repurchase stocks. The 10-year Treasury note rate topped 2.26 percent, while government debt in Europe sold off faster on hawkish sings from the European Central Bank. The euro hit the highest level in more than a year and sterling rose a seventh day.

Volatility returned the financial markets as investors grapple with the fallout from central banks that seem intent on raising interest rates amid signs that the global economy is picking up steam, signalling the start of the end to nine years of stimulus. Tech remained a victim of investor rotation from growth to value stocks, suggesting that investors may be questioning the growth prospects in the world’s largest economy.

Here are the main moves in markets:

Stocks

· The S&P 500 Index fell 0.9 percent as of 4 p.m. in New York, paring a drop that at its worst reached 1.4 percent. It’s still up 2.4 percent in the quarter.

· Goldman Sachs Group Inc. and JPMorgan Chase & Co. rose more than 0.5 percent, the only two members of the Dow Jones Industrial Average to advance.

· The Nasdaq 100 Index lost 1.7 percent, pushing its loss in June past 2 percent. The measure rose as much as 21 percent this year, before a selloff that started three weeks ago took 3 percent back.

· The Stoxx Europe 600 Index fell 1.3. Emerging-market equities were little changed.

Currencies

· The Bloomberg Dollar Spot Index fell 0.2 percent.

· The euro increased 0.6 percent to $1.1444, for the highest level since last year’s Brexit vote.

· The pound climbed 0.6 percent to $1.3000, heading for a seventh straight day of gains, the longest winning streak since April 2015.

· The Canadian dollar rose 0.3 percent after jumping 1.2 percent on Wednesday as Bank of Canada Governor Stephen Poloz reiterated he’s considering tighter policy.

Commodities

· WTI futures advanced 19 cents to $44.93 a barrel, capping a sixth day of advances and the longest rally since April. Prices gained as government data showed a drop in U.S. gasoline supplies that have remained stubbornly high at the start of the summer driving season.

· Gold futures fell 0.4 percent to $1,244.30 an ounce.

· Copper futures jumped 1 percent, advancing for a seventh day.

Bonds

· The yield on 10-year Treasuries rose four basis points to 2.27 percent, after gaining two basis points on Wednesday and jumping seven basis points in the previous session.

· The yield on U.K. gilts increased 10 basis points to 1.25 percent. French 10-year yields added seven basis points, as did those of 10-year German bunds.

Source:

Bloomberg
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