Meta, the parent company of Facebook, warned a few days ago to prepare for a severe economic recession. Goldman Sachs said that the risk of another sharp drop in the stock market is still quite high. Market sentiment is unstable, and it is worried that the central bank’s aggressive measures to curb inflation will have an impact on economic growth. U.S. stocks opened lower on Friday (1st), thenDow JonesS&P,that fingerflip up,half feeThe decline narrowed.
Before the deadline,Dow Jones Industrial Averageup nearly 120 points or nearly 0.4%,Nasdaq Composite Indexfell more than 60 points or nearly 0.6%,S&P 500 Indexrose more than 0.5%,Philadelphia SemiconductorThe index fell more than 2 percent.
Risk assets continued to be the target of selling on Friday as fears of a recession outweighed fears of runaway inflation. Separately, Federal Reserve policymakers are determined to bring inflation back to their 2 percent target, and investors are assessing the impact of sharp interest rate hikes on the economy.
Stocks and bonds have been hit by outflows this week as investors worry about a potential contraction in the global economy amid runaway inflation and hawkish central banks.
About $5.8 billion was withdrawn from global equity funds in the week ended June 29, Bank of America said, citing data from EPFR Global. The data showed that bond redemptions amounted to $17 billion.
In the past six months, global corporate bond issuance has exceeded that of all of 2020. Survey data shows that more than 70 deals have been delayed or cancelled so far in 2022.
Goldman Sachs strategists said the risk of another slump in stocks remained fairly high as investors believed the economy would only slip into a mild recession. “Asset prices have fallen this year due to higher interest rates and inflation,” Goldman Sachs strategists led by Christian Mueller-Glissmann said in a note. “Unless bond yields start to fall, providing a buffer against equity risk premiums that have been pushed up by recession fears, Otherwise, the stock market may fall further.”
As of 21:00 on Friday (1st) Taipei time:
Stocks in focus:
Kohl’s (KSS-US) fell 18.91% to $28.94 a share in early trade
Kohl’s announced the sale of its business to Franchise Group, the parent company of The Vitamin Shoppe (FRG-US) negotiations were suspended. Kohl’s said deteriorating retail and financial conditions since the bid had posed significant obstacles to deals as consumers spent more cautiously. In addition, Kohl’s also lowered its second-quarter forecast.
Micron (MU-US) fell 3.85% to $53.15 a share in early trade
Chip makers Micron and AMD (AMD-US) and a handful of companies are signaling that a two-year-old global semiconductor chip shortage is easing as rising inflation and a cooling economy squeeze consumer and business spending, and years of good times for chip stocks may be on the horizon. Put an end to it.
Micron Chief Executive Sanjay Mehrotra said industry demand has weakened, with recent research suggesting PC shipments will drop nearly 10 percent this year, while smartphone shipments are expected to drop nearly 6 percent.
Meta(META-US) fell 2.7% to $156.89 a share in early trade
Meta Platforms Chief Executive Mark Zuckerberg told employees a few days ago that it would cut its plans to hire engineers by at least 30 percent this year, warning that it should prepare for a severe recession.
Zuckerberg said Meta had lowered its engineer hiring target for this year to about 6,000 to 7,000 from about 10,000 previously. In addition to reducing the number of recruits, the company is retaining some vacancies to deal with lost manpower, while increasing performance management efforts to weed out unfit employees.
Today’s key economic data:
- The final reading of the U.S. Markit Manufacturing PMI in June came in at 52.7, 52.4 expected and 52.4 previously
- US June ISM manufacturing index reported 53, expected 54.9, the previous value of 56.1
- U.S. construction spending in May reported a monthly growth rate of -0.1%, expected 0.4%, and the previous value of 0.2%
Wall Street Analysis:
Inflation is a priority for central bankers and investors are most concerned about losses, Chris Iggo, chief investment officer at AXA IM Core, wrote in a note to clients. “The interest rate and inflation markets believe that monetary tightening will be enough to lower inflation, but to do that, there will be a price to pay for economic growth,” he said.
“The dollar remains near this year’s highs as the Fed remains focused on tackling inflation by raising rates despite fears of a recession, a core assumption that remains intact,” ING analysts said in a note.
Asian shares also fell sharply on Friday, with Dirk Schumacher, head of European macro research at Natixis, saying that while the region is not yet in a recession, investors are concerned it could be. “In Europe, and globally, the cyclical situation doesn’t look good,” he added.