Worries about the Chinese economy and high energy prices continue to weigh on sentiment
Wall Street stocks ended mixed overnight, with the tech-heavy Nasdaq leading the losses amid disappointing Netflix earnings. The company’s shares plunged 35% during the regular session. The Dow ended up 0.71%, the S&P 500 fell less than 0.1% and the Nasdaq dropped 1.22%. US 10-year Treasury yields dipped from a more than three-year high of 2.981% to 2.8436%. In its Beige Book, the Fed reported the economy expanded at a moderate pace last month while business reported issues with elevated inflation.
Similarly, Asian stocks were mixed on Thursday as worries about the Chinese economy and high energy prices weighed on sentiment while a retreat in US Treasury yields offered some relief for investors. Japan’s Nikkei 225 jumped 1.23% and South Korea’s Kospi added 0.35%. On the negative side, Shanghai Composite plunged 2.26% after a report that China’s imports of oil from Russia dropped 14.1%y/y in March, suggesting demand is waning already amid persistent lockdowns.
In Europe, equities opened little changed before turning mixed in recent trading as markets struggle for direction globally these days. Investors digest another hawkish message from the ECB as de Guindos said earlier today that a rate hike is possible in July and will depend on data. Against this backdrop, EURUSD rallied above the 1.0900 mark to notch two-week highs around 1.0935. The euro is now flirting with the 20-DMA, but it looks like the common currency could need an extra catalyst to overcome this immediate barrier and target 1.1000 for the first time since early-April.
As for the dollar itself, the USD index retreats from March 2020 highs seen around 101.00 earlier in the week. The greenback dipped back below 100.00 area amid profit-taking, while less hawkish comments from Fed officials could have added to a local selling pressure surrounding the US currency. Despite the retreat, the overall bullish tone surrounding the greenback remains intact. The buck edged lower to one-week lows around 99.80 before settling just below 100.00 in recent trading.