STATE OF THE MARKETS
Stocks tumbled on recession fears. US stocks tumbled on Tuesday after hawkish comments from Fed members and weaker than expected economic data sending fears across markets. Tech-laden Nasdaq (-2.98%) fell the most, followed by S&P (-2.01%), Russell (-1.86%) and Dow (-1.56%) as flights to safety were noted with yields turning lower. The 10Y benchmark dipped to 3.18% as the Dollar index jumped to the 104.60 mark.
In the commodities market, crude continued its upward trajectory and punched $111.88/bl as markets continue to weigh supply concerns and China reopening. Gold was under pressure and closed below $1,820/oz for the first time in 10 days after Fed’s hawkish comment weighed on the precious metal. Elsewhere, iron ore rebounded to $131/tn as markets hope for demand from China reopening.
In the FX space, sentiments seemed mixed as Swiss and Dollar regained traction in demand alongside Loonie and Aussie in the short and medium term accounts. Long term sentiments were little changed.
On Wednesday, markets expect to remain cautious as the GDP report might confirm a recession. Earnings reports to watch include Paychex (PAYX), General Mills (GIS), McCormick (MKC), MSC Industrial (MSM), UniFirst (UNF), Duck Creek (DCT) and MillerKnoll (MLKN) as well as the latest figures in US mortgage applications and the much awaited GDP. The EIA petroleum status report will be in the spotlight for energy traders.
OUR PICK – No New Pick
We stay on the sideline. Recession fears continue to plague the broad market right now as yields inversions are getting worse. As at writing, the 3Y (3.18%), 5Y (3.21%) and 7Y (3.22%) yields more than 10Y (3.15%) while the 30Y stood at 3.27%. Fed’s talk showed that the Fed is determined to reign in inflation despite the risk of economic disruption. Dollar jumped on expectation of another 75bps hike in July and this weighed on riskier assets.
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