Published: Tue, July 09, 2019
Markets | By Otis Pena

Tech, Fed Suspense Weigh on Markets

Tech, Fed Suspense Weigh on Markets

"The re-adjustment in expectations did push the dollar higher and had a negative effect on Asia but Europe has been supported by investors saying "whatever the Fed does, the ECB (European Central Bank) will still cut", said Andrew Milligan, head of global strategy at Aberdeen Standard Investments.

South Africa's rand weakened early yesterday against a soaring dollar as investors factored in fewer rates cuts by the US Federal Reserve following stronger than anticipated US jobs growth in June.

The US jobs data on Friday suggested the world's top economy is in better shape than anticipated and would not need substantial rate cuts to be kick-started.

Among individual companies on Wall Street, Apple fell 2.1 after Rosenblatt Securities downgraded shares in part due to expected weakness in iPhone sales.

Investors have rushed to scale back Fed rate cut expectations following unexpectedly strong gains in USA jobs for June, with U.S. stock markets falling for a second straight day.

The Dow Jones Industrial Average lost 150 points, or 0.6%, to 26,771.

Still, money markets are pricing in a 94% probability of a 25-basis-point rate cut at the Fed meeting on July 31, according to CME Group's FedWatch tool. In afternoon trade, the chances were 92 per cent and 8 per cent, respectively.

The Federal Open Market Committee is due to meet July 30-31 but ahead of that Fed chair Jerome Powell will deliver a semiannual monetary policy report to the House Financial Services Committee on Wednesday in the United States and then the Senate Banking Committee on Thursday.

Also up this week will be the release of minutes from the Fed's June meeting, while U.S. and Chinese officials are working to schedule top-level trade talks.

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The attention is now expected to turn to the start of the second-quarter earnings season next week.

Chinese blue-chips ended down 0.3%, while Hong Kong's Hang Seng fell 0.7%.

Boeing Co BA.N fell 1.5% after Saudi Arabian budget airline flyadeal said it would not proceed with a provisional $5.9 billion order for the planemaker's grounded 737 MAX aircraft, instead opting for a fleet of Airbus A320 jets.

A slew of the blue-chip stocks in the Dow extended losses around the closing bell, with shares of USA pharmaceutical giant Merck & Co and its counterpart Pfizer dropping 1.82 percent and over 1.41 percent respectively, among the worst performers.

Symantec Corp (SYMC.O) rose 5% after Jefferies said the cybersecurity firm is a "logical financial acquisition" amid reports Broadcom Inc (AVGO.O) in advanced talks for a deal.

Declining issues outnumbered advancers for a 1.72-to-1 ratio on the NYSE and for a 2.15-to-1 ratio on the Nasdaq.

The S&P 500 posted 20 new 52-week highs and no new lows; the Nasdaq Composite recorded 42 new highs and 50 new lows.

Shares of Boeing slid over 1.33 percent after Saudi Arabian budget airline Flyadeal said it will cancel its order for Boeing's grounded 737 Max jets, which was worth 5.9 billion USA dollars.

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