Strong economic data dented investor optimism across the markets
US stocks fell on Thursday after reaching fresh all-time highs earlier in the session, with the Dow Jones seeing its worst day of 2024 to finish 1.53% lower. The S&P 500 dropped 0.74%, and the Nasdaq Composite gave up 0.39%. risk sentiment deteriorated after fresh data showed US business activity grew at its fastest pace in more than two years in May, suggesting the Fed may delay interest rate cuts amid a resilient economy. In individual stocks, Boeing fell 7.6% after the company’s Chief Financial Officer said he expects the plane maker’s cash flow and production problems to persist through the second quarter.
Asian shares were mostly lower on Friday after Wall Street retreated in the aftermath of strong economic reports that raised the possibility of interest rates staying high. Japan’s Nikkei 225 index lost 1.27% and the Hang Seng in Hong Kong fell 1.44%. South Korea’s Kospi declined 1.25%, while in Australia, the S&P/ASX 200 shed 1.08%. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.5% and was on course for a 1% weekly decline.
As the US interest rate outlook weighed on investor sentiment across the globe, European stocks opened lower as well. The regional Stoxx 600 index slipped 0.74% in early deals, with all sectors in the red. On the data front, British retail sales fell by more than expected in April, dropping by 2.3% on a monthly basis. London’s FTSE 100 fell nearly 0.5% since the start of the session. As for US stock index futures, the mood is more tentative and muted in early pre-market deals.
Meanwhile, the US dollar advanced as strong US economic data bolstered the prospect of interest rates staying higher for longer. The USD index saw the fourth bullish session in a row on Thursday to turn slightly negative ahead of the weekend even as safe-haven demand persisted. The greenback briefly exceeded the 105.10 zone to settle around the 105.00 figure during the European hours in anticipation of fresh cues on interest rates. The downside potential looks limited at this stage.
