US equities slumped on Thursday as investors await tonight’s non-farm payroll report, as well as fresh concerns of geopolitical tensions.
United States
The S&P500 reversed early gains to drop -1.23% amid broad-based selling with 85% of stocks lower and all sectors negative. The Nasdaq Composite fell -1.4% along with the Russell 2000 -1.08% while the VIX jumped 14.79% to 16.45 on rising geopolitical concerns. The geopolitical tension concerns were linked to comments from Israeli Prime Minister Benjamin Netanyahi that Israel would operate against Iran and its proxies and hurt those of seek to harm it.
Those concerns drove bond yields lower, with the 2-year Treasury yield down -2.7 basis points to 4.645% along with the 10 and 30-year rates by -3.8 and -3.4 basis points respectively. This decline points to risk off behaviour from investors, especially in light of comments from Federal Reserve of Minneapolis President Neel Kashkari that rate cuts may not be needed this year if progress on inflation stalls.
Europe
European equities finished the session modestly higher having closed before US equity markets turned lower. The Euro Stoxx 600 edged up 0.16% along with the DAX 0.19% and CAC 0.48% while the FTSE100 was little changed. Data on Thursday showed Eurozone producer prices eased more than expected, a welcome sign in the fight to bring inflation back down to target. For the month of February, price declined -1% compared to the -0.7% forecast, and over the year declined -8.6%.
Australia
The ASX is expected to open lower this morning, with ASX200 futures down -63 points or -0.8% to 7,803. The index rebounded 0.45% on Wednesday after heavy losses on Tuesday, with all sectors higher and 79% of stocks finishing up. Technology was the best-performing sector, up 1.18% after being the biggest underperformer on Tuesday. In economic data, building permits for February declined -1.9%, a surprise miss compared to the 3.3% forecast by analysts.
Commodities
Oil prices climbed on concerns of tension in the Middle East with both WTI and Brent crude up 1.55% and 1.75% respectively. Iron ore futures in Singapore finished -1.77% lower on Thursday and are a further -0.4% weaker this morning at US$97.35 while copper is 0.45% higher overnight. Gold declined -0.45% to US$2,289 an oz, silver also declined -1.12% while Bitcoin traded 2.66% higher.
Economic Calendar
Eurozone Retail Sales (YoY Feb) 20:00
Canadian Unemployment (MoM Mar) 23:30
US Non-farm Payrolls (MoM Mar) 23:30
Fed Barkin Speech 00:15
Fed Bowman Speech 03:15
This article was written by James Woods, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
