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US futures, GameStop, falling yen - what's moving markets

Investing.com -- Wall Street remains on track for a positive month and quarter, but troubled retailer GameStop slumped after reporting weak holiday quarter ales. The Japanese yen fell to its lowest level since 1990, while the crude market also weakened after a large U.S. inventories build.

1. Futures higher; on track for positive quarter

U.S. stock futures traded higher Wednesday, rebounding after a recent pullback, as investors await further cues on the Federal Reserve's interest rate trajectory.

By 05:00 ET (09:00 GMT), the Dow futures contract was 180 points, or 0.5%, higher, S&P 500 futures gained 24 points, or 0.5%, and Nasdaq 100 futures rose by 90 points, or 0.5%.

The major indices closed with minor losses Tuesday, the third negative trading day in a row in the case of the broad-based S&P 500 index, but the three averages are still on pace to end the trading month and quarter, which both conclude with Thursday’s closing bell, higher.

There is little in the way of U.S. economic data to digest later Wednesday, and trading ranges are likely to be limited ahead of Friday’s release of the Fed’s favorite inflation gauge, the core personal consumption expenditures price index.

Federal Reserve Governor Christopher Waller is due to speak later in the session, and investors will be studying his comments on future monetary policy.

2. GameStop slumps after weak holiday sales

GameStop (NYSE:GME) stock slumped premarket after the troubled video game retailer reported disappointing fourth-quarter earnings amid softer sales over the important holiday period.

At 05:00 ET, GameStop fell 15% premarket, set to add to the near 12% losses year-to-date.

Net sales fell by about 24% in the fourth quarter from a year earlier, driven by a nearly 30% slump in its software business, of which gaming software, digital software and PC entertainment software makes up about a quarter of overall revenue.

The company responded to these weak numbers by saying it had cut an unspecified number of jobs to reduce costs.

"An increasing mix of digital downloads is hurting physical retail, and there is simply no reason to go to the store if a consumer can just order a game and download it immediately," Wedbush Securities analyst Michael Pachter said, in a note.

"Revenues are highly unlikely to rebound unless management figures out a way to drive store traffic."

3. Yen slumps to lowest level against dollar since 1990

The Bank of Japan raised interest rates earlier this month for the first time since 2007, but this has done little to support the yen, which fell to its weakest level against the U.S. dollar since 1990 earlier Wednesday.

At 05:00 ET, USD/JPY traded marginally lower at 151.50 having earlier in the session climbed as high as 151.97.

The BOJ’s landmark exit from negative interest rates had been highly anticipated, and thus largely priced in, and the Japanese central bank has continued to stress the need for an accommodative monetary policy for the time being.  

The yen is the lowest-yielding G10 currency, making it ideal for carry trades, and investors who had trimmed such trades before the BOJ meeting, as well as other central bank gatherings, have been rebuilding their positions.

With the BOJ unlikely to hike again soon, officials have resorted to intervention threats to try and stem the yen’s fall.

Japan's finance minister warned, earlier Wednesday, of "decisive steps" to tame "disorderly" moves, echoing his comments before the central bank intervened in late 2022 to prop up the yen.

4. Crypto-related short sellers face massive losses

Bitcoin has seen a dramatic recovery from its 2022 lows, including strong gains this year, but this has resulted in massive losses for short sellers of crypto-related stocks, according to data compiled by S3 Partners.

The world’s biggest cryptocurrency has recorded a nearly five-fold recovery from 2022 lows when Bitcoin fell as low as $15,000, gaining over 60% this year so far, and recently clocked record highs of over $73,000. 

These recent gains were largely driven by the U.S. approval of exchange-traded funds that directly track the token’s price.

However, this recovery has led to nearly $1.9 billion in mark-to-market losses for short sellers of crypto-related stocks, S3 Partners revealed this week.

The total short interest in crypto-related stocks stands at $10.7 billion, with MicroStrategy (NASDAQ:MSTR) and Coinbase (NASDAQ:COIN) Global account for 84% of this short interest, short-sellers of MicroStrategy, the world's largest corporate holder of Bitcoin, leading the downturn with $1.4 billion in mark-to-market losses.

Despite Bitcoin's bullish run, the total short interest in the sector has increased by $3.67 billion to $10.71 billion in 2024, suggesting continued skepticism or strategic hedging by short sellers. 

5. U.S. crude inventories rise sharply - API

Oil prices fell sharply Wednesday after the release of industry data showing a hefty increase in U.S. inventories. 

By 05:00 ET, the U.S. crude futures traded 1.2% lower at $80.66 a barrel, while the Brent contract dropped 1.1% to $84.67 per barrel.

Data from the American Petroleum Institute, released Tuesday, showed that U.S. crude inventories saw a build of 9.3 million barrels in the week to March 22, substantially above expectations for a draw of 1.2 million barrels. 

The official U.S. inventory data, from the Energy Information Administration, is due later Wednesday, but the API reading has raised questions over just how tight U.S. crude markets were, especially as oil production remained at record highs of over 13 million barrels per day. 

Expectations of tighter global oil supplies- following Russian supply curbs, geopolitical disruptions in the Middle East and increased U.S. refinery activity- powered oil prices to four-month highs earlier in March. 

 

 

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