A 1% decline in the Stoxx 600 was compounded by subpar earnings reports. Following a reduction in its profit projection, Diageo Plc plummeted 16%, while Richemont suffered a 6.8% loss due to an unexpected decline in revenue from luxury watches. Oil and energy shares both increased, with West Texas Intermediate rising above $76 per barrel once again.
In general, bonds were weaker. The yield on the 2-year Treasury note remained over 5%, while the rate on German 10-year bunds increased by nine basis points.
A fireside conversation with Christine Lagarde, the president of the European Central Bank, is scheduled for later on Thursday. Investors are now waiting to hear from her. Additional remarks are expected from Mary Daly of the San Francisco Fed, Raphael Bostic of the Atlanta Fed, and Lorie Logan of the Dallas Fed. Powell’s statement yesterday that authorities won’t think twice to tighten if necessary shook the markets.
As central banks must persuade the market that there won’t be a pivot happening tomorrow morning, Powell’s speech was kind of a “talk-tough” moment, according to Erick Muller, head of product and investment strategy at Muzinich & Co. in London. “This type of speech telling people to stop right there will be heard every time they see markets pricing too many rate cuts.”
Trade Desk Inc., a digital advertising company, fell 27% in US premarket trade on the release of disappointing sales guidance, which it attributed to broader economic factors. Following the release of an equity offering and a dismal third-quarter performance, online retailer Groupon Inc. saw a 37% decline.