The S&P 500 index fell on Tuesday as oil prices hit 2023 highs, sparking fears of a slowdown in the global economy. U.S. crude oil prices recently hit their highest point since November of the previous year. Meanwhile, on Tuesday, OPEC confirmed a robust demand growth projection for this year and next. West Texas Intermediate crude oil futures contracts advanced to about $89 a barrel, up from $66 in March.
The energy sector outperformed on Tuesday as U.S. crude oil prices hit their highest since November 2022.
Yesterday, in the main trading session, the stock averages recorded losses. The Nasdaq composite was particularly hard hit, falling 1% due to pressure on technology stocks. The S&P 500 index slipped nearly 0.6%, while the Dow Jones fell less than 0.1%.
Apple shares fell 1.7%, putting negative pressure on indices, while Oracle experienced its worst day in 20 years following disappointing financial results and a weak outlook. Wall Street is now turning to the August CPI report, due Wednesday morning. According to Dow Jones, economists estimate that inflation rose 3.6% yearly, representing an increase from the previous month’s reading of 3.2%. Core CPI, which excludes food and energy costs due to their volatility, is forecast to have risen 4.3% in August, up from 4.7% in July.
Any sign of sustained inflation could push the Federal Reserve to maintain or even further raise interest rates. While the central bank is expected to keep rates stable in September, it is expected to keep them at the highest levels seen in 20 years, at least until mid-2025.
The Shanghai Shenzhen CSI 300 Index fell 1.56%, while the Shanghai Composite Index fell 0.89%. Meanwhile, Hong Kong’s Hang Seng posted a slight loss of 0.07%. Sentiment towards China remained generally unfavorable, as August macroeconomic data highlighted fragility in Asia’s dominant economy. However, real estate stocks have offered some positive signs in this environment.
Shares of Chinese real estate firm Country Garden Holdings experienced rapid growth, rising nearly 9% yesterday, although they later moderated gains. This notable development follows news that the company’s creditors have favored a three-year repayment extension on six onshore bonds.
Monday’s decision saw creditors approve the troubled company’s proposal to extend the repayment of eight onshore bonds worth 10.8 billion yuan (equivalent to $1.48 billion). These events have significantly impacted the market, attracting investor attention and raising questions about the company’s future and the implications for the Chinese real estate sector.
Japan’s Nikkei index fell following comments from Bank of Japan governor Kazuo Ueda. Ueda suggested the central bank could consider abandoning negative interest rates, ending decades of monetary policy supporting local stocks. In an interview with a local newspaper, Ueda indicated that the BoJ will collect significant data later this year, determining whether interest rates should remain negative.
These statements directly impacted Japanese financial markets, raising investors’ attention on the future direction of the BoJ’s policies. Alibaba CEO Daniel Zhang unexpectedly announced his decision to give up the position of number one of the company’s cloud unit. This move was a surprise because Zhang was expected to lead the cloud unit as Alibaba prepared to split into six parts.
Despite this news, Alibaba confirmed that it will proceed as planned with the split of the cloud unit, placing it under a separate management team. Furthermore, the company has hinted at the possibility of listing this division in the future. In addition, there are reports that Alibaba is considering suspending plans to list its F supermarket chain reshipped due to a lower rating than expected. These developments attract media and investor attention, as they could significantly affect Alibaba’s future and business strategy.
Price lists for Tuesday, 12 September 2023
DOW Jones -0.051% to 34,645.99
S&P 500 -0.57% to 4,461.90
NASDAQ Composite -1.04% to 13,773.61