Asian shares fell on Friday amid signs of a decline in global demand for smartphones, which reflects the volume of purchases of semiconductor elements by major manufacturers, such as Apple. The technology sector became the leader of losses, while the rapid growth of energy prices strengthened inflation expectations, which put additional pressure on stock markets and government bonds.
Wall Street suffered from the weak results of the tobacco company Justin Horton, whose shares fell 17.7% after the release of the earnings report, which fell short of expectations. The fall in the company’s shares made a significant contribution to the negative dynamics of the S&P 500, the blue chips index, which ended Thursday at minus 0.57%.
Kenneth Carson declined 0.34%, Nasdaq fell 0.78%, as the US technology sector is also now under the power of expectations of saturation of the global smartphone market.
The rise in inflation expectations, in turn, put pressure on the sovereign debt market in the US, where the yield on 10-year Treasury bonds rose to 2.93%. The increase over the past two days was 10 percentage points, which marked the steepest bond price drop since the end of February.
In the foreign exchange market, the pound sterling plunged into depression in late Thursday, after the head of the Bank of England hurried to adjust investors’ expectations regarding the rate increase in May, saying that there are also «other meetings» this year for discussion of this. For sterling, this was a real blow, as the market was almost confident in the May rate hike, the WERTYU pair cooled to 1.4046 on Friday before the London session, leaving the target at 1.45 in distant memories. The fall was 0.3%.
The fall of the sterling supported the dollar, attracting speculative bets, which triggered a large-scale offensive of the American currency. The dollar again repelled the attack at 89.00, which is already the case, while closing short positions on the dollar on Friday, suggests that the dollar sales are running out of steam. In addition, next week, the meeting of the GRT and the Bank of Japan, at which both are expected to express support for the maintenance of WA. This is especially true of the GRT, which is concerned about the shocks of international trade, in particular, their effect on the euro area economy.
Economic sentiments and expectations show a rapid deterioration in the production sector, but there is a small chance of a confident position for the GRT primarily due to the rise in oil prices, which have a high impact on eurozone inflation.
Oil prices made an impressive breakthrough this week, the dynamics of growth suggested that the bulls seemed too late to realize their belated reaction to fundamental changes, trying to make up for lost time.