Asia fell, on Friday 2 August it follows in the footsteps of Wall Street (Nasdaq -2.3%) and at 7.40 am Italian the Nikkei fell by 5%, the Hang Seng 2.4%, Shanghai 0, 4%, while the futures in American tech the index was in the red by 1.3%. To balance the markets, the quarterly of Intel below expectations and the group’s decision to suspend the dividend. The tech giant’s stock lost 19% in pre-market trading. Add to this that weak US manufacturing and employment data fueled fears of a recession.
Fed too cautious? This is an escape from the Treasury
US stocks fell sharply as bonds rallied after the release of fresh weak macro data that left markets wondering if the Federal Reserve was right to delay its rate cut until September. Jobless claims hit a nearly one-year high and manufacturing activity weakened.
The Nasdaq 100 posted its biggest daily decline since May 2022 on Thursday, while the S&P 500 fell 1.4%. Meanwhile, the yield on the US ten-year T bond fell in Asia from 3.98% to 3.96%, returning to being a safe haven asset. Markets are now fully pricing in rate cuts of three-quarters of a point this year. Governor Jerome Powell signaled this week that the board is on track to cut rates in September unless the pace of inflation halts. So pay attention to Friday’s US employment report.
Is the BoJ turning hawkish?
Most economists polled by Bloomberg see the BoJ key rate, which was raised in recent days to 0.25%, rising to 0.5% by the end of this year, with less than a quarter of experts predicting that the increase will occur in October and more than 4 in 10 aimed for December.
Intel suspends its dividend, stock falls (-19%) to worst decline since 2000
The CEO of Intel Pat Gelsinger has announced $10 billion in cost cuts that will reduce capital expenditures and result in staff reductions of 15%. Then he added: “In other words, we must align our cost structure with our new operating model and fundamentally change the way we operate,” he underlined in a note published on the company’s website. Intel Thursday (stock lost 5.5% yesterday, lost 19% in pre-market Friday). “Our revenues have not grown as expected, and we have not yet fully benefited from powerful trends, such as artificial intelligence.”
Intel will also suspend its dividend starting in the fourth quarter. The stock has an implied dividend yield of 1.72% prior to the announcement. As for the chip company’s second-quarter accounts, they came out with adjusted earnings below expectations and lowered guidance. The stock fell 19% in Thursday’s extended session following the earnings call. A drop of that magnitude, if it lasts through Friday’s regular session, would be the worst for Intel since the stock fell 22% on September 22, 2000. (reproduction reserved)