STATE OF THE MARKETS
Stocks sank as recession fears returned . US stocks sank on Wednesday after news of better than expected retail sales that may prompt the Federal Reserve to continue hiking a series of 50 point hikes going into 2023. The small cap Russell (-1.91%) fell the most, followed by Nasdaq (-1.54%), S&P (-0.83%) and Dow (-0.12%) as investors continued to flock to bond safety that sent yields lower across the board. The 10Y benchmark dropped further to 3.67% as the Dollar index retained bids around the 106 handle.
In the commodity markets, recession fears stoked demand concerns and safe haven flows that saw crude oil and gold tumbled lower. The black gold is nearing $83/bl while the yellow metal drops below $1,760/oz as at writing. Elsewhere, iron ore however, was stalled around $92.30/tn as markets continue to weigh the impact of global recessions.
In the FX space, short term traders were quick to bid the oversold Dollar while offering Aussie and Kiwi. Sentiments remained mixed with Loonie and King Dollar remained on offer in the medium and long term while Aussie and Kiwi on bids.
On Thursday, markets expect to remain volatile as investors brace for the latest release of jobless figures that could change the Fed’s hike expectations. Earnings to watch include Alibaba (BABA), Applied Materials (AMAT), Palo Alto Networks (PANW), NetEase (NTES), Ross Stores (ROST), Macy’s (M), Gap (GPS) and Kohl’s (KSS).
OUR PICK – NZD/USD
Commodities to suffer from global recession fears. Global recession fears would suffocate commodity currencies like AUD, NZD and CAD among others. Gold demand might help buoy Aussie while crude oil might help Loonie but Kiwi would suffer the most if recession escalates globally. Sentiments model signaled a short term sell while we use open TP to capture long term downside risk.
Disclaimer:
This article is for general information purpose only. It is not an investment advice or a solicitation to buy or sell any securities. Opinions expressed are of the authors and not necessarily of MFM Securities Limited or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.