Daily market review

Global stocks: NASDAQ snaps; Europe and Asia sink some more

United States

Unfavorable economic and company news weighed on US sentiment, sending money into Treasuries and out of stocks Tuesday. Losses were concentrated in the NASDAQ, which fell 2.4 percent; the Dow Jones managed a 0.2 percent rise, while the S&P fell 0.8 percent.

A substantial drop in new home sales offers the first definitive indication that the US housing market is cooling rapidly. Sales in May fell 16.6 percent to a 591,000 annualized rate that was more than 100,000 below Econoday's low estimate, results that confirm recent weakness in homebuilder and mortgage-application data.

Company news also sent shivers. Snap, a camera and social media company, fell 43.1 percent after warning of slowing growth. The news sent other social media companies lower including Meta Platforms, down 7.6 percent, and Twitter, which fell 5.6 percent.

Abercrombie & Fitch fell 28.6 percent after the casual-wear retailer posted a loss and lowered guidance. Bucking the trend was auto parts chain AutoZone which rose 5.8 percent after beating estimates.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$0.37 to US$113.79 while spot gold gained US$12.61 to US$1,866.20. The US dollar fell vs. major currencies. The US Treasury 30-year bond yield fell 11 basis points to 2.97 percent and the 10-year note yield fell 10 basis points to 2.76 percent.

Europe

European shares, in line with Asia and a weak opening in the US, posted broad losses Tuesday: Germany's DAX fell 1.8 percent, France's CAC lost 1.7 percent and the UK FTSE dipped 0.4 percent.

Markets didn't react to the monthly round of PMI flashes which were mostly as expected showing steady growth for European economies. France's services PMI, at a strong plus-50 reading of 58.4, was a standout; other favorable readings included a steady and solid 54.7 for German manufacturing, and a slightly moderating but still welcome 54.9 for the Eurozone's composite PMI.

Less welcome was a steep drop in the UK services PMI which, reflecting climbing input costs including wages, fell more than 7 points to a 51.8 level consistent with only modest growth. Also in negative ground, though less so than expected, was a minus 1 showing for the CBI distributive trades headline to indicate the country's retail sector is only just keeping its head above water.

A Financial Times report that the British government, in an effort to help electricity customers, may impose a windfall-profit tax on electricity suppliers sent related shares sharply lower including SSE plc, down 8.3 percent, and Centrica down 7.2 percent.

Asia Pacific

Reports that major banks, including Goldman Sachs, are lowering their forecasts for China pulled down the Shanghai as did Monday's comments from President Biden who said the US would militarily intervene should Taiwan be attacked.

The Shanghai fell 2.4 percent while Hong Kong's Hang Seng lost 1.8 percent. Taiwan's Weighted Price Index fell 1.2 percent.

China's state television said the government will step up efforts to support the economy, including broadening tax rebates, postponing social security payments, cutting vehicle taxes, and launching new investment projects. Lockdowns in Shanghai are reported to still be in place.

Japan's flash PMIs for May showed steady and modest growth for manufacturing and modest but improving growth for services. The Nikkei 225 fell 0.9 percent.

Looking ahead*

Wednesday's data open with a policy statement from the Reserve Bank of New Zealand. European data include Germany's GfK consumer climate index and the second estimate for German first-quarter GDP. Durable goods orders will be posted in the US as will minutes from May's FOMC meeting.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies

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