Wall St rally pauses on Apple downgrade

2024-01-03
Summary:

Asian stocks fell as Wall Street closed lower on 2024's first trading day. The 10-year Treasury yield surpassed 4.000%, dampening rate-cut optimism.

Asian stocks declined on Wednesday after Wall Street ended lower the first trading session of 2024. The 10-year Treasury yield ticked above 4.000% to a two-week high on ebbing optimism about rate cuts.

Futures show traders expect about a 79% chance of a 25 bps or more in the Fed’s meeting in March, according to the CME Group's FedWatch Tool. Traders see the target rate at 3.83% at the end of this year.


The Nasdaq 100 index slid 1.7% Tuesday, the benchmark’s biggest drop in two months, weighed down by the Magnificent 7. Apple shares hit a 7-week low after Barclays downgraded the stock to underweight.


ASML was barred by the Dutch government from exporting some of its tools to China, the company said. It shares was down 2.6% lower and sparked deep concerns over the semiconductor industry.


The VIX jumped around 6%, one of its biggest advances since Fed Chair Jerome Powell’s pivot last month though the fear gauge remains at subdued levels. Some cited Monday’s earthquake in Japan and Middle East tensions boosting oil prices as reasons for the sell-off.


But the panic could be tentative. Kristalina Georgieva, the head of the IMF, said that the US economy is “definitely” headed for a soft landing thanks to the Fed’s “decisiveness” in taming inflation.

NASUSD

The Nasdaq 100 is trading near the initial support around 16,500 after breaching the trendline. The next area of interest could be its 50 EMA around 16,000.


Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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