Why did NASDAQ lose more than 4%?
Before the Bank of England, the Swiss National bank had another week's surprise with a 50 bps rate hike, while the Bank of Japan's earlier decisions were in line with market expectations.
With increasing inflation in Swiss, the national bank decided to increase the rates by 50 bps to control the prices. Even if it is not too much compared with other economies, 2.5% inflation (the highest level since 2008) was good enough reason to push the SNB to raise the rates for the first time in seven years. SNB, which is commonly known as a currency intervener, in this meeting, did not talk about currency depreciation in its statement, which can lead them to sell their foreign assets, including about $177 billion in US equities.
After yesterday's expected BoE decisions and outputs, we had the central bank meeting in Japan earlier today. BoJ did not change the rates as desired and continued its ultra-loose monetary policy. These policies continued pressure on the Japanese Yen and sent the BoJ back again above 134, while earlier in the day, it fell to 131.50. Japan's 10-year bond yield also hit 0.265%, the highest since 2016, before falling back to 0.257%.
In the United States, after weaker than expected retail sales and trade numbers, yesterday we had more data. The latest labor market data show that Initial Jobless Claims at 229,000 in the week ended June 11 decreased compared with a week ago at 232K applies, but it was more than 215K market expectations. In addition, the US Philadelphia Fed manufacturing index fell to a -3.3 in June, far below market expectations of 5.5 and the previous month at 2.6. This is the first time the data has recorded a negative value since May 2020.
Increasing the risks in the market and holding the 10-year bond yields above 3.2% pushed more and more pressure on stock markets, causing Dow Jones Industrial Average and S&P 500 to lose 2.42% and 3.25%. According to published data, market risk also increased, with USVIX seeing around 33. However, Nasdaq was the main loser with more than 4%, which was not unaffected by the decisions of the Swiss National Bank.
From the technical point of view, NASDAQ is continuing its downtrend, but with less pace. The first and second resistance for ND100 sits at 12,900 and 14,380. For now, buying will not be an option as long as it trades under these levels.
