Stocks in Japan and Australia fell while South Korea rose with Samsung Electronics Co. jumping 6% to trade above its record-high closing level. A gauge of US-listed Chinese companies slid 2% Thursday, a sign the recent gains in Chinese shares were also due for a pause. The dollar edged lower after a four-day rally took it to its strongest level since July. Gold edged up after falling the most since August, still trading below the $4,000 mark.
US stocks slipped Thursday as investors took a breather following a strong rally in the S&P 500 from its April lows, when tariff concerns rattled markets. Gains in stocks have been spurred on by large tech stocks linked to artificial intelligence, leading some analysts to suggest a bubble has been forming.
“Some areas of the market appear overheated,” said Keith Lerner at Truist Advisory Services Inc. “The extended stretch without a meaningful pullback leaves the market more sensitive to negative surprises.”
In other corners of the market, Treasuries fell across the curve Thursday, while silver hit the highest since 1980 as demand for precious metals spread beyond gold. Oil steadied after dropping in the prior session.
The yen headed for its biggest weekly loss in a year even as Japan’s new ruling-party leader Sanae Takaichi, a pro-stimulus lawmaker, said she wasn’t in favor of an excessively weak currency.The Argentine peso rebounded after the US rushed to stabilize the country’s economy, offering $20 billion in financing and carrying out a rare intervention in currency markets after weeks of sharp declines.Elsewhere, the Bureau of Labor Statistics recalled staff to prepare a key inflation report that is necessary to calculate the size of next year’s Social Security checks, according to a Labor Department official with knowledge of the matter. The BLS had suspended all operations, including data collection and the production of economic statistics, as a result of the government shutdown.
Back to equities, even after a series of records to all-time highs, stock positioning data from JPMorgan Chase & Co. suggests some investors including hedge funds are holding back.
The equity beta of monthly reporting macro hedge funds — an indicator of their exposure — remains modestly negative despite becoming slightly less so in recent months, the team led by Nikolaos Panigirtzoglou said.
One of the main reasons the AI bubble talk is misplaced is that the leading spenders continue to enjoy increased earnings power, according to Daniel Skelly, head of Morgan Stanley’s Wealth Management Market Research & Strategy Team.
“These aren’t the dot-com companies of a quarter-century ago that didn’t have earnings, or even viable business models,” he said. “That doesn’t mean the market won’t have setbacks, though. Investors may want to take a look at quality dividend-growth stocks.”
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