- While a surge in megacap companies that had brought the S&P 500 to the brink of a bull market began to fizzle, US futures and European equities failed to extend Tuesday's gains.
- Apple looked set to extend Tuesday’s decline, falling in premarket trade along with Nvidia and Microsoft, in a signal that more air is coming out of the rally in tech shares.
- Tech is suffering from the possibility that central banks may maintain higher rates for a prolonged period of time, undermining hopes that they will switch to rate reductions later this year. Higher rates would stop the momentum in megacap stocks because the value of such companies is derived by projected future cash flows.
- A larger-than-expected decline in Chinese exports and an OECD warning that the world economy is headed for a sluggish recovery, plagued by persistent inflation and restrictive central bank policies, dampened mood and caused European equities to waver.
- OECD: US Fed Funds Rate seen peaking at 5.25%-5.5% from Q2 2023, and 2 modest cuts seen in H2 2024.
- OECD sees ECB rates peaking in Q3 2023 and remaining unchanged at 4.25% to end 2024.
- OECD: No further rate hikes are expected in Canada and South Korea, and rate peaks are expected in Australia and UK from Q2 2023.
