Markets Retreat as Momentum Stocks and Commodities Correct

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Equity markets are under pressure this morning, extending yesterday’s 1.3% retreat by the NASDAQ, with selling particularly pronounced in markets tied to momentum stocks and the AI trade. South Korea’s KOSPI is down 10.0%, Taiwan is down 5.4%, the Nikkei is down 3.6%, and the Hang Seng is down 1.8%. Micron Technology is down 7.9% premarket after rallying 6.8% to a new all-time high on Monday.

With US-Iran talks continuing and no new skirmishes reported in the Gulf region or elsewhere, the correction in resource prices that began with Crude Oil moving back into the $70s has expanded into other Commodities, particularly metals. Crude Oil is down 0.6%, Gasoline is down 0.4%, Gold is down 1.7%, Copper is down 3.3%, and Silver is down 5.8%.

Flash Manufacturing and Services reports have been rolling out overnight, with Japan, Australia, France, and the Eurozone stronger than expected, while Germany and the UK came in weaker than expected. In the US, NASDAQ futures are down 2.8% and Dow futures are down 0.4%. In Europe, the DAX is down 0.9% and the FTSE is down 0.3%.

In Currencies, the USD is rallying against Commodities and other major currencies. The Euro is down 0.3%, the Loonie is down 0.2%, and the Aussie Dollar is down 0.9%. In Rates, the US 10-year Treasury note yield is steady near 4.50%, while the US 30-year Treasury note yield is steady near 4.95%.

Looking ahead, Bank of Canada Governor Macklem speaks this morning in his first public event following yesterday’s hotter inflation report. US Flash Manufacturing PMI is due at 9:45 am EDT, with the Street looking for 54.8 versus 55.1 previously, alongside US Flash Services PMI, where the Street is looking for 51.0 versus 50.7 previously. FedEx reports after the close this afternoon.

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