Marketmind – Nasdaq déjà vu
June 30 – A look at the day ahead from Danilo Masoni.
The tech-heavy Nasdaq emerged as the biggest player at the end of June, up 5.6% so far and set for its best monthly performance since November of the last year.
Another overnight closing record is no coincidence given assurances from the U.S. Federal Reserve after its hawkish turn in mid-month, while the Delta variant recreated that already-seen feeling of economic uncertainty associated with the pandemic.
So, as travel and cyclical stocks felt the heat, the combined market capitalization of America’s five biggest tech games (Google, Amazon, Facebook, Apple and Microsoft) approached a whopping $ 9 trillion. , or about 35% of nominal GDP. .
But reopening the trade is far from dead and once the month-end dress-up by investment managers trying to look smarter at their choices is over, some experts expect confidence in the market to be over. economic recovery is gaining momentum.
A taste of this came from the major Wall Street banks which increased their dividends after passing the Fed’s stress test. Morgan Stanley delivered a big surprise that boosted its shares. Confidence in strong corporate earnings growth is intact.
The day ahead, however, will see cyclically-trending European stocks head south with futures down around 0.2% amid rising COVID-19 infections in the UK and elsewhere. US equity futures indicate a stable start for Wall Street.
Japan’s Nikkei erased its gains as domestic infections rose ahead of next month’s Olympics. In Australia, authorities have extended lockdown and social distancing measures to contain the Delta variant, putting the Aussie under pressure.
Attention will turn to June’s Eurozone inflation flash data and the US ADP jobs report, which could set the tone for Friday’s non-farm wage data. Prior to that, the dollar stabilized near recent highs.
Finally, it’s worth keeping an eye out for market warning signals. The SKEW index, which tracks demand for accident protection, hit a record high on Friday, indicating concern among institutional investors over a black swan shock. The index was the last just below that peak.
Key developments that should provide more direction to the markets on Wednesday:
- Manufacturing in China slows as supply shortages disrupt Asian industry
- Japanese industrial production in May posts steepest drop in a year
- UK final Q1 GDP -1.6% Q / Q
- Eurozone, France, Italy CPI flash June
- American ADP
- Canadian PPI
- SNB publishes data on foreign exchange purchases for the first quarter
Reporting by Danilo Masoni; edited by Dhara Ranasinghe
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