(Bloomberg) — European stocks are set to fall after a mixed day on Wall Street, as speculation grows that the technology sector’s rally is losing steam.
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Euro Stoxx 50 futures fell, while U.S. futures edged higher on Monday after U.S. non-tech sector stocks rose.Nvidia, the chipmaker at the heart of the artificial intelligence revolution, crashed about $430 billion in three days, crossing the technical threshold for a correction.
Asian stocks rose, with Japanese stocks outperforming the region. Investors scooped up value stocks and shifted out of the technology sector into other parts of the market. The yen strengthened and the U.S. dollar weakened against most G10 currencies. Government bonds were little changed during Asian trading.
“As the end of the quarter approaches, global investors are restructuring their portfolios, selling recently performing assets and buying laggards,” said Hideyuki Ishiguro, chief strategist at Nomura Asset Management, adding that this is likely to be a factor supporting the overall Tokyo Stock Price Index.
Market participants will also be keeping an eye on France’s main parties, which will debate on Tuesday night ahead of the first round of parliamentary elections on Sunday, while Spain is due to release its May producer price index later the same day, along with an ECB speech.
In Asia, Chinese machinery stocks rose after President Xi Jinping urged scientists and researchers to step up innovation with more urgency, while Premier Li Qiang, speaking at the World Economic Forum, warned of the fallout when countries split economically and pushed back against criticism that his country’s industrial policies have led to overcapacity.
Meanwhile, Reuters reported, citing three anonymous people familiar with the matter, that the United States is investigating China Mobile, China Telecom and China Unicom over concerns the companies could provide American data to Beijing for use through their U.S. cloud and internet businesses.
Deutsche Bank’s Binky Chadha said U.S. stocks will take a breather after a rally led by tech stocks. There’s a lot of good news priced into the market, and there could be downside risks if that optimism proves unfounded, said Lori Calvasina of RBC Capital Markets. Oppenheimer’s John Stoltzfus said the bull market looks sustainable, but he expects some profit-taking.
“Even if the tech industry performs well over the summer, it’s certainly possible that the industry could decline,” said Matt Murray of Miller Tabak. “Even if we subscribe to the most bullish scenario for the AI phenomenon in the second half of 2024, no group moves in a straight line.”
In commodity markets, crude oil held up gains as investors worried about the potential fallout from rising geopolitical tensions. Gold edged lower after rising on a weaker U.S. dollar in the previous session, making the commodity more attractive. Copper rose as investors pondered possible Chinese stimulus measures following weak Chinese fiscal revenue data.
Bitcoin rebounded after Monday’s drop as losses piled up in the cryptocurrency market after its second-biggest weekly drop of 2024, reflecting waning demand for bitcoin exchange-traded funds and uncertainty over monetary policy.
Major events this week:
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U.S. Conference Board Consumer Sentiment Index, Tuesday
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Federal Reserve Board Chairs Lisa Cook and Michelle Bowman to speak Tuesday
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U.S. new home sales Wednesday
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China industrial profits Thursday
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Eurozone economic confidence, consumer confidence on Thursday
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U.S. durable goods, jobless claims, GDP on Thursday
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Nike reports earnings on Thursday
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Japan Tokyo Consumer Price Index, unemployment rate, industrial production, Friday
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US PCE Inflation, Spending and Income, University of Michigan Consumer Confidence, Friday
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Fed President Thomas Barkin to speak Friday
Some of the key market developments:
stock
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S&P 500 futures were up 0.1% as of 6:58 a.m. London time.
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Nikkei 225 futures (OSE) rose 1.1%
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Japan’s TOPIX rises 1.7%
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Australia’s S&P/ASX 200 rose 1.3%
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Hong Kong’s Hang Seng Index rose 0.4%
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The Shanghai Composite Index fell 0.4%
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Euro Stoxx 50 futures fell 0.3%
currency
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The Bloomberg Dollar Spot Index was little changed.
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The euro was little changed at $1.0742
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The Japanese yen rose 0.1% to 159.44 yen to the dollar.
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The offshore yuan was little changed at 7.2828 yuan per dollar.
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The Australian dollar rose 0.1% to $0.6664.
Cryptocurrency
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Bitcoin rose 2.6% to $61,041.52.
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Ether rose 2% to $3,375.37.
Bonds
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The yield on the 10-year Treasury note was little changed at 4.24%.
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Japan’s 10-year government bond yield rose 1 basis point to 0.995%.
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Australia’s 10-year government bond yield fell 2 basis points to 4.19%.
merchandise
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West Texas Intermediate crude oil was little changed
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Spot gold fell 0.4% to $2,324.98 an ounce.
This story was produced with assistance from Bloomberg Automation.
–With assistance from Toshiro Hasegawa.
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