Moving markets today: Asian stocks fall amid trade tensions; Australia sees June jobs surge; focus turns to UK employment, ECB and AJ Bell earnings
The Nasdaq Composite experienced its largest single-day decline in 18 months following remarks by Donald Trump concerning Taiwan’s national security, which unsettled investors and triggered a sell-off in semiconductor stocks. This led to declines in Asian markets, especially in sectors related to chip manufacturing, amid fears of worsening trade tensions between the US and China. Meanwhile, the yen strengthened to a six-week high following suspected interventions by Tokyo last week. Oil prices rose due to a larger-than-expected decrease in US crude stocks, while gold prices held steady on hopes of a potential US interest rate cut. In other news, US President Joe Biden tested positive for COVID-19, forcing the cancellation of a planned speech in Las Vegas on Wednesday. In Australia, the job market in June exceeded expectations, although the unemployment rate slightly increased. United Airlines’ shares declined after the company lowered its profit forecast. Investors are closely watching the UK jobs data on Thursday to assess whether it supports expectations for an interest rate cut in September. The European Central Bank is scheduled to announce its latest policy decision later today, with no changes expected at this time.
Here are five key takeaways for your day.
ECB to hold rates steady, leaves door open for September cut
The European Central Bank is likely to keep interest rates unchanged during its upcoming announcement on Thursday.
However, it is expected to signal a potential future rate cut, although the specifics of this guidance may be vague and could come with certain conditions.
Market forecasts indicate expectations for two rate cuts by the end of this year and five cuts by the end of next year, a sentiment that has not been contradicted by ECB policymakers in recent weeks.
The ECB’s policy decision will be made public at 1215 GMT, followed by a press conference by Christine Lagarde at 1245 GMT.
Australia’s June jobs surge surpasses forecasts, despite rising unemployment
Australian employment jumped well beyond expectations in June, yet the jobless rate still ticked higher as more people went looking for work, a mixed report that leaves open the question of whether interest rates need to rise further.
Figures from the Australian Bureau of Statistics on Thursday showed net employment climbed 50,200 in June from May, topping market forecasts for 20,000. Full-time employment rose 43,300 for a second month of strong gains.
The jobless rate still edged up to 4.1 per cent, from 4.0 per cent, compared to forecasts of a steady outcome. The participation rate rose to near an all-time high at 66.9 per cent, while hours worked bounced 0.8 per cent as fewer workers than usual took holidays in the month.
United Airlines shares drop amid lowered profit forecast
United Airlines has announced its third-quarter profit forecast, which is lower than Wall Street anticipated, leading to a decline in its shares during after-hours trading.
The airline expects to earn between $2.75 and $3.25 per share from July to September, compared to analysts’ estimates of $3.38 per share.
This summer, the US airline industry has struggled with an excess of seats on domestic routes, outpacing consumer demand and driving fares down.
What’s coming up
Investors are keeping a close eye on the European Central Bank’s policy decision today, with expectations that the bank will hold its current position. Key insights will come from officials’ comments, which could hint at when the next rate cut might occur.
In the UK, Thursday’s focus will be on job market data, which could influence expectations for a rate cut in September. Analysts predict a slowdown in wage growth from 6 per cent in April to 5.7 per cent in May, and the June claimant count is expected to increase by 23,400.
AJ Bell is also set to release its results on Thursday.
In the US, attention will be on the Philly Fed’s regional factory survey and the latest weekly jobless claims.
Asian market in read
The S&P 500 dropped 1.39 per cent to 5,588.27, while the Nasdaq Composite fell 2.77 per cent to 17,996.93. In contrast, the Dow, which has lagged behind the other major US indexes this year, rose on Wednesday, achieving its third consecutive record high.
All of the “Magnificent Seven” stocks saw declines. The Russell 2000, which focuses on small-cap stocks, ended its five-day winning streak, closing 1.1 per cent lower due to fading optimism about imminent rate cuts.
In Asian markets, the Topix index decreased by 0.9 per cent, and the Nikkei 225 dropped 1.8 per cent. South Korea experienced milder losses, with SK Hynix down 3 per cent and Samsung Electronics falling 1.4 per cent, causing the Kospi index to lose 1.1 per cent. Stocks in Hong Kong and China also edged down.
Chinese stocks slipped as investors awaited policy news from a major leadership meeting in Beijing, with the Shanghai Composite Index down 0.4 per cent and the CSI300 index falling 0.5 per cent.
In the commodities market, gold edged up 0.18 per cent to $2,462 per ounce, just shy of the record high of $2,483.60 reached on Wednesday.