Worst trading day for US markets since December 2022. The value of the S&P 500 index fell 2.3 percent, while the NASDAQ fell as much as 3.7 percent. It seems that investors' appetite for risk has decreased, and technology stocks in particular have already been bitten. So far, 155 of the 500 largest U.S. stocks have reported financial results, with the financials of top companies Tesla and Alphabet underwhelming markets.
Next week, the results of Apple, Microsoft, Amazon and Meta are expected, which could turn the markets in the other direction. In Europe, the decline was slightly smaller (STOXX 600 -0.6%), but here investors' expectations were significantly lower than in the USA. Nestlé's financial results are expected today and more information on how the company has been affected by increased cocoa prices, as well as Hermes, which will indicate demand in the luxury goods segment.
Purchasing Managers' Indices (PMI) published yesterday in Europe surprised the markets and caused an increase in interest rate cut expectations. Eurozone services and industrial indicators were weaker than expected and the overall PMI has now fallen to 50.1. Expectations for an ECB rate cut in September rose above 90 percent yesterday on weaker economic growth prospects. But there are risks here, too, with the same report announcing that costs in the service sector rose sharply and sales prices rose at a similar rate to last month. Industry is not much better – despite the ever-shrinking activity of the sector, production costs here are rising for the second month in a row.
China has surprised with another major interest rate cut. US manufacturing PMIs were also weaker than expected, but services beat expectations and the composite PMI was the highest in more than two years.
Morning trade in Asian markets is negative. The bad mood moved from the USA to Asia, the biggest fall is observed in Japan (Nikkei 225 -3.3%), the yen has grown for the fourth day in a row. In China, the medium-term interest rate has been cut, but traders do not see the need to rejoice, only more worried about the country's economic situation. The Hang Seng index fell 1.8 percent, while the Shanghai CSI 300 lost 0.6 percent.
