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Tech slumps again
The S&P 500 closed lower due to mega cap earnings misses and higher-than-expected US GDP growth.
LVMH reported a 14% decline in sales in China for Q2.
European companies like Hugo Boss and Burberry face profit declines due to China's economic slowdown.
The Chinese yuan fluctuated amid suspected People's Bank of China intervention; the Japanese yen saw extended buying due to safe-haven demand.
A correction?
The S&P 500 closed lower on Thursday as risk sentiment was still dented by earnings miss from mega caps. Additionally, the US GDP surpassed expectations to 2.8% higher than the expected 2% delaying expectations of early rate cuts which also weighed on gold and stocks.
The Federal Reserve last week before yesterday’s good data appeared poised to cut interest rates by 25 basis points in September but if Donald Trump wins the presidential election in November another Fed cut would be less certain in December and renewed hikes could be back on the table depending on the administration's fiscal policies, said a former Fed official.
China Woes
European companies are facing setbacks due to China's economic slowdown, with more challenges ahead for businesses heavily dependent on demand from the Asian economic giant.
Companies like Hugo Boss AG and Burberry Group Plc have experienced negative impacts on their profits as customers in China become more cautious. LVMH has also reported a 14% decline in sales in the region that includes China during the second quarter.
PBOC intervention?
Asian currencies were muted this morning ahead of US PCE data, whilst the dollar remained steady.
The Chinese yuan experienced significant fluctuations amid suspected intervention by the People's Bank of China, The USDCNY pair dropped sharply from near eight-month highs on Thursday.
While the Japanese yen saw extended buying, benefiting from safe-haven demand and the unwinding of carry trades.
