3 Key Topics Under the Spotlight in the Markets

3 Hot Topics Shaping the Market This Week

As the week in the markets comes to a close, three hot topics are at the forefront of investors’ minds.
The focus is primarily on the slowdown of US inflation, which has triggered a rotation out of Big Tech and high volatility in the yen.

1.
Central Banks: What Are the Expectations?

In the US, inflation cooled significantly in June.
Treasury yields fell as data renewed confidence that the Federal Reserve will cut interest rates at least twice this year.
Chicago Fed President Austan Goolsbee stated that the latest CPI data was “excellent,” providing the evidence he was waiting for to ensure the central bank is on track to reach its 2% target.

In Europe, a Bloomberg survey among analysts revealed that the ECB will take a measured approach to lowering rates as political turmoil poses a series of risks to inflation returning to 2%.

2.
Big Tech Slowing Down

With regards to the stock markets, the cooling of US inflation has sparked a rotation out of Big Tech.
Technology stocks fell in Asian trading on Friday, echoing Wall Street declines.
Investors dumped the so-called Magnificent Seven stocks (Apple, Microsoft, Nvidia, Alphabet, Amazon.com, Meta Platforms, and Tesla) more than they have in over a year.
The Nasdaq 100 dropped 2.2% on Thursday.
However, Steve Eisman of Neuberger Berman Group predicts that the disproportionate strength of US mega-cap tech stocks will “last for years” as artificial intelligence becomes more accessible to consumers through electronic devices.

3.
Turbulence for the Yen

The yen experienced a mixed day, leaving traders on edge amid speculation that authorities had intervened with official support.
The Bank of Japan conducted rate checks on the foreign exchange market, a precursor to possible intervention, according to a trader with direct knowledge of the event.
Chief currency official Masato Kanda stated Thursday evening that he could not confirm if the move was an intervention.
He followed up with comments on Friday morning, suggesting that speculation likely drove the moves given the yield differential between the US and Japan.

Local media attributed the move to a series of official purchases by Tokyo to support a currency that hit 38-year lows, although authorities, as usual, did not release statements regarding any intervention.
The Nikkei reported that on Friday, the BOJ conducted checks at banks on the euro-yen exchange rate, citing various sources.