Wall Street falls despite Nvidia rally through $1,000

Headlines

* Dow sinks as Boeing and inflation fears dampen AI fervour

* Gold falls to two-week low, oil drops to recent cycle lows

* Dollar recovers and moves higher as bond yields climb

* Eurozone wage growth surprise picks up, sending inflation warning

FX: USD advanced to a one-week high above the 50-day SMA at 104.95. Stronger than expected PMI data, that surged to two-year highs, saw buyers step in. A September rate cut is now near enough a 50:50 bet.

EUR gave up early gains after upbeat German and eurozone PMIs. That said, services were not quite as firm as forecast even though it was the highest reading in a year.  Euro area wages failed to slow and were near the top end of estimates at 4.7%. A major Fib level of the 2024 sell-off sits at 1.0806.

GBP softened with dollar strength. PMI data was mixed as services and the composite print eased. But manufacturing expanded for the first time since the middle of last year. The early election call should have only minimal impact on markets. Both parties are currently close on policy and it’s the opposition Labour’s to lose.

USD/JPY hit a high above 157 before paring gains. Yield differentials continue to hold sway in favour of the dollar. The 10-year US Treasury yield pushed higher very close to 4.50%.

AUD fell for a fourth straight day after finding resistance around 0.67 last week. Prices have dipped below the next major level at 0.6616. USD/CAD headed higher for a fourth session in a row. The theme around BoC easing ahead of the Fed has gripped markets this week.

Stocks: US equities fell with the jump in Nvidia failing to save the broader indices.  The S&P 500 closed 0.74% lower at 5267. The tech-dominated Nasdaq 100 lost 0.44% to finish at 18,623. The Dow Jones underperformed, settling down 1.53% at 39,065. Nvidia surged over 9% as EPS and revenue beat with strong data centre revenue. A 10-for-1 stock split and raised cash dividend of 150% helped the bulls. Real estate was the worst performing sector down over 2.1%.

Asian Stocks: APAC futures are lower. Asian stocks were mixed with Nvidia’s earnings helping semiconductor names. The ASX 200 was dragged lower by the weak mining sector. The Nikkei 225 clawed back the 39,000 level on yen weakness and tech strength. The Hang Seng and Shanghai Comp were muted amid ongoing tariff frictions.

Gold plunged over 2% as yields and the dollar moved higher. Prices spiked up to $2450 early on Monday. Profit taking was also seen in copper which tanked another 1.6% after its 5% decline on Wednesday.

Chart of the Day – Dow tumbles on Boeing sell-off

The Dow Jones suffered its biggest one-day percentage drop since March last year. Strong business activity and relatively more hawkish comments from a Fed official saw stocks turn red. Boeing shares didn’t help the index as they finished down 7.6% after the CFO warned of a 2024 cash burn and delayed plane deliveries to China due to regulatory reviews.

After hitting a record high at 40,077, prices have struggled with yesterday’s move pushing the mildly overbought daily RSI down below 50. The index also closed below the Fib retracement level (38.2%) of the April low to May high at 39,140. The midpoint is at 38,850 with the 50-day SMA just above at 38,899.

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