BIG-TECH FEARS CONTINUE
Equity markets on both sides of the Atlantic finished lower last week as bumper NVIDIA earnings and renewed hopes for a December rate cut couldn't overcome concerns over 'Big-Tech' valuations and spending.
Data releases are light this week with US markets closed for Thanksgiving on Thursday but investors will watch for the release of the Fed's Beige Book and parse it for further hints on monetary policy direction. The UK budget is unveiled on Wednesday and is expected to be geared heavily towards spending cuts.
The week started with heavy negative sentiment as fears over 'Big-Tech' valuations and spending levels continued to unsettle investors. The NASDAQ 100 logged 5 consecutive days of losses. NVIDIA, on Wednesday, announced yet another set of bumper earnings results but despite a short reprieve, even that wasn't enough to lift the gloom and selling accelerated through Thursday afternoon.
The release of the US Federal Reserve minutes from its' October rate meeting showed division between members but suggested that, on balance, a December rate cut may be on the cards. This news saw sentiment lift on Friday and markets closed higher on the day but not by enough to prevent a negative trading week for equity indices.
The Trump administration unveiled a 28-point peace plan for Russia and Ukraine and President Trump ramped up pressure on both sides to commit to a ceasefire plan. Despite early criticism from Ukraine and Europe, comments this morning suggest that the plan may contain a framework which could form an acceptable agreement for both sides.
The S&P 500 closed down 1.95% for the week. The tech-heavy NASDAQ 100 lost 2.74% while, in Europe, the STOXX 600 booked a loss of 2.21% through the week. AI valuation & spending concerns continued to be a drag in the US with Federal reserve minutes giving a Friday boost which allowed indices to claw back some ground.
Bond yields fell last week, (bond yields fall as bond prices rise) as official Federal Reserve minutes from the October FOMC meeting were interpreted to be somewhat dovish, suggesting that a December cut might be on the table. Traders increased their expectations for a rate cut from a 50% to a 70% probability. The 10-year US Treasury yield fell by 10bps over the week from to 4.06%. The German bund equivalent dropped by 5bps to 2.71%.
- Mon 24th EU - ECB President Lagarde speaks in Slovakia
- Tue 25th US - Conference Board Consumer Confidence Index
- Wed 26th US - Federal Reserve Beige Book / UK - Budget
- Thu 27th EU - ECB Minutes released / US - Markets Closed for Thanksgiving
This is intended as a general review of investment market conditions. It does not constitute investment advice and has not been prepared based on the financial needs or objectives of any particular person.