The dollar index, which hit a one-month high on Wednesday, moved further higher to a new two-month high after the Federal Reserve hinted at a faster rate hike after its meeting on Wednesday; U.S. stock investors returned to growth stocks, with value stocks selling off and energy, banking and materials sectors leading the decline. Technology stocks stood alone, supporting the Nasdaq in the three major U.S. stock indexes fruitful, will maintain the rally into the closing bell.
Most of the popular Chinese stocks were up, but education stocks continued to plunge. China’s Ministry of Education recently established the Department of Out-of-School Education and Training Supervision, and the Securities Times commented on the front page that the core goal of the department is clear, namely to promote the “double reduction” work on the ground, the strong purge of out-of-school education and training is unprecedented, and the capital-supported industry “blindfolded mad rush The “blindfolded rampage” of the capital-supported industry is a thing of the past. In addition, the new report said that Sichuan suspended the approval of the establishment of private compulsory education schools.
Although the dollar rose sharply, but most of the terms of the U.S. bond yields failed to continue Wednesday’s rise, long bond yields fell especially, 30-year U.S. bond yields fell to a four-month low, the U.S. bond yield curve flattened significantly. Analysts believe that this is an important signal that QE is coming to an end, based on previous QE experience speculation that U.S. bond yields are approaching cycle highs and will fall even more in the future. In addition, further unwinding of yield curve steepening trading positions betting on inflation re-inflation is also seen as a factor affecting the bond market. Exiting the 5-year over 30-year steepening trade, TD Securities said the Fed’s hawkish message on Wednesday led to a sharp drawdown in the inflation reflation trade, a move amplified by short covering.
Hit by a high dollar, precious metals plunged en masse, with gold near its biggest drop in eight years and palladium down more than 10%, while base metals such as copper, agricultural commodities and crude oil futures also fell. Cryptocurrencies were not spared, with bitcoin falling further below $38,000 after dropping below $40,000 on Wednesday.
In Europe, the pan-European stock index ended a nine-day positive streak falling to record highs, with mining stocks falling the most. Shares of German biotech CureVac NV plunged after the last phase of clinical trials showed that the new crown vaccine developed by the division failed, with an effectiveness rate of only 47%.
The Dow fell four straight to a new five-week low and the S&P had three straight negative days. The energy and financial sectors led the decline, and the IT sector led the rise. Small-cap stock indexes fell more than 1%. CQQQ, a mid-cap ETF, rose more than 3%.
The three major U.S. stock indexes opened slightly lower collectively, with the Nasdaq Composite Index performing best, turning up quickly at the beginning of the session and maintaining gains since then, hitting a new intraday high since April 29 at the end of the morning session, with an intra-day gain of more than 1.1%. Although the S&P 500 index turned up at the beginning of the session, but more than once during the session turned down, down more than 0.6% at lunchtime to refresh the daily low. Dow Jones Industrial Average turned up at the beginning of the day soon after the fall, and has continued to move downward since then, once fell below 33,630 points in the afternoon to hit a new intraday low since May 19, down more than 400 points during the day.
Ultimately, the three major indices only the Nifty closed up, or 0.87%, at 14161.35 points, ending a two-day losing streak. Dow closed down 210.22 points, down 0.62%, at 33823.45 points, down four days in a row, a new low since May 12, after Wednesday again closed down more than 200 points, down 0.77% on Wednesday, the largest closing decline since May 18. The S&P fell for three consecutive days, closing down 0.04% at 4221.86 points, hitting a new low for two consecutive days since last Wednesday, June 9, down 0.54% on Wednesday for the biggest drop since May 18.
Small-cap stocks lost ground in the broader market, value stocks dominated by the small-cap index Russell 2000 continued to move down after a short turnaround at the beginning of the session, the midday decline expanded to more than 1%, closing down 1.18%. The technology-heavy Nasdaq 100 index closed up 1.29%, outperforming the broader market.
Of the S&P 500’s 11 major sectors, five closed lower and six closed higher on Thursday. Among the declining sectors, energy, down nearly 3.5 percent, and financials, down nearly 3 percent, led the decline, with materials down more than 2 percent and industrials and consumer staples down more than 1 percent. Up in the sector, the information technology sector rose more than 1% to lead the way, showing the excellent performance of technology stocks, followed by a rise of nearly 0.8% in health care, the smallest gain was up more than 0.3% in real estate.
Leading technology stocks rose, Tesla rose nearly 2%. FAANMG six major technology stocks, in addition to the 0.8% rise in Google’s parent company Alphabet, the other are up at least more than 1%, Amazon rose more than 2%.
Chip stocks are also up, the semiconductor sector ETF rose more than 1%; AMD closed up more than 5%, Nvidia rose more than 4%. In addition to Tesla, other new energy auto stocks also rose, ideal car rose more than 8%, Nikola rose nearly 8%, Xiaopeng car rose more than 7.8%, Azera car rose more than 5%, Tesla rose more than 1%. faanmg collectively rose more than 1%. China Technology Index ETF rose 3.4%.
Along with the decline in U.S. bond yields, bank stocks fell in tandem. Among the big bank stocks, Wells Fargo fell over 6%, Bank of America fell over 4%, Morgan Stanley and Citi fell over 3%, JPMorgan Chase fell nearly 2.9% and Goldman Sachs fell over 2%.
Most of the popular Chinese stocks rose, Chinese ETF CQQQ closed up nearly 3.5%, Futu Holdings, Zhihu rose more than 4%, Jingdong, Beili Beili, Tiger, Poundland, Tencent ADR rose more than 2%, Alibaba rose more than 1%. But Chinese education stocks failed to reverse Wednesday’s decline, with Good Future closing down nearly 14%, High Way and New Oriental down more than 8%, and NetEase Youdao down more than 9%. Highway is down more than 90% from its record high at the end of January; Good Future is down nearly 80% from its February high.
In Europe, the Euro Stoxx 600 ended its nine-day streak of record highs, led by a nearly 2.5% drop in basic resources, where mining stocks are located, among various sectors. Among individual stocks, German biotech company CureVac NV, which failed to meet the efficiency target for the experimental new crown vaccine, plunged 44.3%, the biggest drop since its IPO. Major European stock indexes, German stocks rebounded, approaching the record high set on Tuesday, French stocks rose for five days, further approaching the historic high nearly 21 years ago, British stocks ended a five-day winning streak, dragged down by banking stocks in Western stocks fell for three days.
European bonds fell U.S. bonds rose during the 10-year U.S. bond yields fell 10 basis points 30-year fell 16 basis points to a four-month low only 2-year rose
U.S. 10-year benchmark Treasury yields turned down before the European stock market, European stocks had a short turn up in the middle of the day, and then continued to move down, U.S. stocks tested 1.47% at lunchtime, refreshing the intraday lows this week, down about 10 basis points during the day, giving back all the gains of more than 8 basis points on Wednesday, after which some recovery, near the end of the U.S. stocks back on 1.51%, U.S. stocks closed at 1.52% below, down about 6 basis points during the day that sits at the lowest level in the contemporaneous period since June 4.
The 30-year U.S. bond yield fell below 2.05% at midday in U.S. stocks, hitting a new low since mid-February, with the largest intra-day drop of 16 basis points, the largest intraday drop since February, with U.S. stocks closing at about 2.1%.
By the end of the day in New York, only the 2-year yield climbed among the major maturities. 10-year U.S. bond yields fell more than 7 basis points during the day, 30-year U.S. bond yields fell more than 11 basis points, 5-year yields fell 1.45 basis points, and 2-year yields rose 0.41 basis points to 0.2093%.
The yield curve for the 5-year and 30-year bonds continued to set new lows for the year. By late New York, the 30-year and 5-year U.S. bond spread narrowed 9.935 basis points to 121.091 basis points, after falling to 116.755 basis points at one point during the day.
European Treasuries mostly retreated in price on Thursday, with yields picking up and Greek bond yields rising for three days in a row. British 10-year benchmark Treasury yields rose 3.6 basis points to 0.776% during the day; German bund yields rose 5.5 basis points to -0.195% during the same period, both erasing Wednesday’s decline.
The dollar index rose above 92 during the day for the first time in two months bitcoin fell below $38,000 ethereum once fell more than 6%
After jumping to a new one-month high during Wednesday’s session, the ICE Dollar Index (DXY), which tracks the exchange rate of a basket of six major currencies, stayed up, with U.S. stocks rising above 92.00 at lunchtime, a new intraday high since early April, and the first intraday breakthrough of 92 in two months, up nearly 1% during the day, the biggest gain since March last year.
By the close of U.S. stocks on Thursday, the dollar index was close to 91.94, up nearly 0.9% intraday, refreshing the biggest gain in a year set on Wednesday; Bloomberg Dollar Spot Index rose 0.6%, up five days in a row, the longest streak since March 23 last year, and the biggest two-day gain since March last year, up 0.8% on Wednesday, the biggest gain in a year.
Offshore yuan (CNH) fell for five days in a row, at 5:59 GMT on the 18th, the offshore yuan against the dollar at 6.4571 yuan, a new low since the end of New York on May 12, down 166 points from the end of New York on Wednesday, the lowest intraday drop to 6.4653 yuan a new low since May 7.
Bitcoin (BTC) continued to fall, closing below $37,700 in the U.S. and down more than 2% in the last 24 hours, falling below $37,400 at one point after the close, continuing to set new intraday lows for the week and falling more than $2,000, or more than 5%, from the intraday highs in the European session.
Ether (ETH), the second largest cryptocurrency by market capitalization after Bitcoin, approached the $2,300 mark, hitting a new low since last Saturday, June 12, and fell more than 6% from its intraday high, with U.S. stocks closing below $2,340, down more than 3% in 24 hours.
CoinMarketCap data shows that mainstream cryptocurrencies continued to fall across the board on Thursday, with ethereum leading the most recent 24-hour decline by the U.S. stock close, Cardano (ADA), the fifth largest cryptocurrency by market capitalization, down more than 3%, Litecoin (LTC) and Bitcoin Cash (BCH), the 12th and 11th largest cryptocurrencies, both down more than 2.8%, and Dogcoin, the sixth largest cryptocurrency ( DOGE) fell more than 1.9%, the seventh largest cryptocurrency Ripple (XRP) fell more than 1.7%, and the fourth largest cryptocurrency BNB (BNB) fell nearly 1%.
Gold down 4.7% nearing biggest drop in eight years, palladium down 11% biggest drop in 13 months
New York gold futures, which closed slightly higher on Wednesday, plunged on Thursday. COMEX August gold futures closed down $86.6, or nearly 4.7 percent, to a new low for the main contract since April 30 this year, almost as much as it closed down on March 13 last year when it hit its biggest drop since April 15, 2013.
New York silver futures also plunged, with COMEX July silver futures closing down 7% at $25.86 per ounce, a new low since April 20.
Platinum fell for a third straight day, with NYMEX July platinum futures closing down 7.6%. Palladium ended a two-day streak, with NYMEX September palladium futures closing down $324.60, or 11%, the biggest drop since March last year.
Copper fell more than 3% to a new two-month low, and tin fell below $31,000 for the first time in two weeks in three consecutive negative days
London base metal futures fell across the board on Thursday. Lund copper gave back all of Wednesday’s gains, closing down $352, or 3.64 percent, at $9,316 per ton, a new low since April 16, closing below $10,000 for the fourth consecutive day. Copper futures also plunged in New York, with Comex July futures closing down 4.7% at nearly $4.18/lb. The cumulative decline for the week has been more than 8%.
Aluminum, zinc and lead all retreated, hitting new lows in more than three weeks, nearly eight weeks and seven weeks, respectively. LEN nickel and LEN tin fell for three days in a row, with LEN nickel hitting a three-week low for three days and LEN tin closing down 2% at $30,600 per ton, closing below $31,000 for the first time since June 7.
Crude oil hit the biggest drop in four weeks, ending a streak of at least two-year highs, soybeans fell more than 8%, corn fell nearly 6%
International crude oil futures ended a streak of daily gains. U.S. WTI crude oil and Brent crude oil closed down more than 1 percent, the largest closing decline since May 20, falling away from more than two-and-a-half years and two-year highs, respectively.
Brent August crude futures closed down 1.76% at $73.08 per barrel. On Wednesday and Tuesday, Brent closed at new highs for the main contract since April 24 and 25, 2019, respectively, and for two consecutive days as of Monday at new highs since April 30, 2019, and last Tuesday and Thursday both at new highs since May 16, 2019.
WTI July crude oil futures closed down 1.54% at $71.04 per barrel, after hitting a new closing high for the main contract since Oct. 10, 2018, for two consecutive days as of Wednesday. As of Friday, U.S. oil was at a new high for two consecutive days since Oct. 16, 2018.
Agricultural products fell even more, with CBOT corn futures down 5.94% at $6.33/bushel late in New York. CBOT wheat futures were down 3.91% at $6.39-3/4/bushel. CBOT soybean futures were down 8.24% at $13.25-1/2/bushel. As of Thursday, the soybean fund SOYB was down more than 12 percent for the week, and if the decline holds, it will be the largest one-week decline on record.