Meta gains on reports of cooling on the Metaverse; Wall St drifts

Meta Platforms rallied amid reports the Facebook owner plans to make deep cuts to the virtual reality Metaverse which underpinned the group’s name-change when the social media platform’s original moniker was seen as overly toxic.

The social media giant was among gainers in a muted day for Wall Street, with investors struggling for direction as weekly US jobless claims weren’t as high as anticipated, but didn’t shift expectations for the Federal Reserve to cut its key rate next week.

US 10-year treasury yields nudged higher as government borrowing costs around the world crept up, with the yield on Japan’s 10-year government bond at an 18-year high while Bank of Japan governor Kazuo Ueda works out what the bank’s neutral rate is and how many more rate hikes he’ll have to make.

Meanwhile, stock markets in Europe were broadly stronger, with automakers such Renault, Stellantis and Porsche all rallying on US President Donald Trump’s commitment to reverse his predecessor’s fuel-efficiency requirements.

Now that’s meta

Stocks on Wall Street were mixed, with the Dow Jones Industrial Average marginally weaker in late trading, while the S&P 500 and Nasdaq Composite were both up 0.1% as investors struggled to push on as the benchmark indices remain near all-time highs.

Meta Platforms was up 4% after Bloomberg reported the social media giant is considering making deeper cuts to its Metaverse virtual reality arm than other areas in the annual cull of costs, with the technology not taking off as envisaged several years ago.

Other big tech majors were mixed, with Nvidia and Tesla gaining, while Apple, Amazon and Alphabet were weaker.

Salesforce advanced 4.1% in late trading after raising its annual outlook, while cloud software firm Snowflake sank 11% as revenue growth fell short of expectations.

Weekly US jobless claims fell unexpectedly to a three-year low in the Thanksgiving holiday affected period, while elevated corporate layoffs didn’t shift market pricing indicating most traders are picking the Federal Reserve to cut its federal funds rate a quarter-point next week.

Government bond yields crept higher, with the yield on US 10-year treasuries up 2 basis points at 4.1%, while Germany’s equivalent rose the same amount to 2.78%, following the rapid rise in Japanese bond yields, which were up about 5 basis points at 1.94%, their highest level since 2007.

Expect more

Japanese government bond yields have been climbing steadily this year as the Bank of Japan moves to raise interest rates as the world’s fourth-biggest economy grapples with growing inflation. Bank of Japan governor Kazuo Ueda told policymakers this week that officials are still working out what a neutral rate is and that he’s not sure how many more increases to the key rate he’ll have to make.

“Japan’s bond yields are getting to levels where investors are wondering when Japanese bond investors will repatriate funds back to their home market, particularly against the backdrop of an historically cheap yen,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “A move of this nature on a large scale would apply upward pressure to global rates and result in a stronger yen.”

The kiwi dollar traded at 89.45 yen at 7am in Auckland from 89.61 yen yesterday.

Stocks in Europe were stronger with the UK’s FTSE 100 up 0.2%, Germany’s DAX 30 gaining 0.8% and France’s CAC 40 climbing 0.4%. European automakers such as Renault, Porsche Automobil Holding , Stellantis and Mercedes Benz Group rallied after US President Donald Trump committed to ditching corporate average fuel economy rules regulating how many miles vehicles have to travel on a gallon of petrol.

The antipodes have a mildly positive tone to start the day, with Australian futures pointing to a 0.2% gain for the S&P/ASX 200 index when trading opens across the Tasman, while the kiwi dollar traded at 57.73 US cents at 7am in Auckland from 57.68 cents yesterday.

There’s no major local data scheduled for today.

Reporting by Paul McBeth. Image from Joshua Hoehne on Unsplash.