Stocks Fall Following Tumultuous Week as Caution Remains – Europe Market Wrap
Stocks sank in cautious trading following a week of AI-driven volatility. Treasuries fell after Chinese regulators ordered banks to reduce their holdings of US paper.
S&P 500 futures fell 0.2%, with technology firms under further pressure. The 10-year Treasury yield jumped 2bps to 4.23% as Chinese guidelines fuelled concerns about the haven value of American assets. The Dollar fell 0.2%, providing support to gold and silver. Bitcoin dropped below $69,000.
Domestic politics also had a significant impact on Monday’s markets. Japanese stocks and rates rose after PM Takaichi’s landslide election victory gave her a strong mandate to pursue pro-stimulus policies. Longer-dated UK gilts declined as uncertainty surrounding PM Starmer’s future reignited concerns about fiscal discipline under his replacement.
The tech sector had been in a tailspin due to concerns over the billions of Dollars being spent on AI. Anthropic PBC’s new automation tool added to the pressure as investors fled stocks perceived to be vulnerable to AI disruption. After a relief surge sent the Nasdaq 100 up more than 2% at the conclusion of last week, contracts on the indicator fell 0.5% on Monday.
Treasuries’ weakness eased as the session progressed, with traders questioning the relevance of the Chinese announcement given the country’s long-standing reduction in US debt holdings. Investors also cited a robust economic backdrop, with the Fed likely to continue interest-rate reduction later this year.
