Milan – The Swiss National Bank cut rates for the second time in a row, while the Bank of England (as expected, refrained from action) paved the way for an easing in August, which provided little inspiration for European stocks.Wall Street closed mixed overnight, while Asia experienced its second consecutive weak session following the aftermath of a tech-stock rally.
Yesterday, the S&P 500 briefly topped 5,500 before changing direction and losing ground as technical support broke down: The Nasdaq fell for the first time in seven days on profit-taking in Nvidia and Apple.
Bloomberg predicts that today will mark the anniversary of the “triple witches,” when options tied to indexes, stocks, and ETFs expire simultaneously, with a cumulative value of $5.5 trillion: the reallocation of these positions could bring some aftershocks to the market.
Brent Kochuba, the founder of SpotGamma, explained to the financial institution that this time the expiry value associated with the call options is about 11 times the notional value of the put options: this is a sign of growing strength in upward bets.
The Tokyo Stock Exchange closed just below par last week, coinciding with the release of Japan’s latest inflation data for May. The Nikkei fell 0.09% to 38,596 points, while the Topix fell -0.03% to 2,724 points. The headline consumer price index, which excludes volatile fresh food prices, rose 2.5% year-on-year last month after a 2.2% increase in April, as gas and electricity subsidies are phased out. In contrast, the so-called “core-core” index, which excludes food and energy prices, slowed to 2.1% from 2.4% in April, marking the ninth consecutive month of deceleration as domestic consumption remained stagnant.
The yen weakened further to 159 against the dollar, forcing Japanese authorities into intervention territory. The euro and sterling also took some hits on the dollar. Asian stocks also slowed, with technology shares hurt by gains and losses in Nvidia. In Tokyo, the Nikkei was flat, just below par, after Japanese inflation slowed in May on weak demand, complicating the outlook for rate hikes. Hong Kong indexes fell more than 1.5%, Shanghai also fell and Seoul fell nearly 1%.
Futures on major European stock exchanges are trading slightly above parity as they continue to focus on central bank moves following the Swiss National Bank’s second consecutive rate cut and the Bank of England’s opening of easing policy in August. The futures on the Frankfurt Dax are unchanged, the futures on the Paris Cac 40 are +0.03%, the futures on the London FTSE 100 are +0.07% and the futures on the Euro Stoxx 50 are +0, 06%.