US stocks were muted on Monday, trimming early gains, as investors weighed a much-anticipated product launch from tech giant Apple and continued hunting for clues about the future path of interest rate rises.
Wall Street’s S&P 500 was down 0.1 per cent in mid-afternoon trading, paring a small advance that had lifted the benchmark index more than a fifth above a recent low in October 2022 — briefly taking it into technical bull-market territory.
Apple’s shares were subdued as the group unveiled a new “mixed-reality” headset, after gaining as much as 2.2 per cent in the run-up to the product launch.
The Nasdaq Composite also edged lower as the weeks-long tech rally took a breather.
The moves in equity markets came as fresh data from the Institute for Supply Management on Monday showed activity in the vast US services sector slowed in May, as new orders softened under the weight of high borrowing costs.
Further damping sentiment on Wall Street was a grim earnings forecast by Morgan Stanley analysts who projected a 16 per cent decline in earnings per share for the S&P 500 to $185 in 2023 compared to a year ago.
The bank’s equity strategists expect corporate America to experience slowing revenue growth and margin contraction because of tighter credit conditions in the wake of the US’s recent regional banking turmoil.
In government debt markets, the yield on the 10-year US Treasury note was flat at 3.7 per cent, while the shorter-dated two-year yield slipped 0.01 percentage points lower to 4.49 per cent — reflecting an ongoing “inversion” of the yield curve.
Elsewhere in stock markets, Europe’s regional Stoxx 600 closed 0.5 per cent lower, while France’s CAC 40 lost 1 per cent and Germany’s Dax shed 0.5 per cent.
The small losses came after European Central Bank president Christine Lagarde said in a speech that underlying price pressures remained strong in the eurozone, an indication that policymakers were likely to continue raising rates. The ECB is next due to announce a rate decision on June 15.
The Federal Reserve will make its own interest rate announcement on June 14. The US central bank has taken interest rates up from near zero in early 2022 to a “target range” of 5 per cent to 5.25 per cent in an attempt to curb inflation.
Brent, the international benchmark, jumped as much as 3.6 per cent after Saudi Arabia said it would cut oil production by 1mn barrels a day, but pared back its gains to trade 0.6 per cent higher at $76.58 a barrel.
West Texas Intermediate, the US marker, rose 4.6 per cent before settling about 0.5 per cent higher, at $72.12. London’s energy-heavy FTSE 100 lost 0.1 per cent, unable to hold on to earlier gains.
Asia’s markets were broadly up, with Japan’s benchmark Topix stock index rising 1.7 per cent and Hong Kong’s Hang Seng index advancing 0.8 per cent. Chinese equities bucked the upward trend, with the CSI 300 index of Shanghai- and Shenzhen-listed stocks down 0.5 per cent.
Official media in China also called on investors to have faith in the country’s domestic stock market, with the state-run Economic Daily suggesting that “clear-headed understanding, staunch confidence, resoluteness and patience” were the “chief responsibilities of all market participants”.
The Turkish lira extended its losses to hit a new record low of TL21.3 against the dollar on Monday, despite the recent appointment of investor favourite Mehmet Şimşek as finance and treasury minister.
The move initially sparked hopes that Turkey’s president, Recep Tayyip Erdoğan, was preparing to change course on his unorthodox economics, which many blame for triggering an acute cost of living crisis that drove the lira lower.
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