Stock Market Today
US and European futures are trading lower, and traders are ready to pick up where they left off yesterday. Wall Street suffered a severe hammering yesterday, and market volatility resumed yesterday as the dead cat bounce began to lose momentum. Traders and investors aren’t backing riskier assets because they are concerned about the slowdown in the global economy and the strong possibility of a recession due to hawkish monetary policies set by various central banks. Their concern is that different central banks have set hawkish monetary policies.
After the S&P 500 dropped more than 2% to a level that was the lowest since November 2020, share prices fell in Japan, Australia, and South Korea. The MSCI Asia-Pacific Equity Index was on track to post its seventh consecutive weekly loss, which would have been the worst losing trend since September 2015. The Chinese stock market gave up its early gains just before a week’s vacation and after manufacturing activity indicated a little increase. Yields on US Treasury securities hardly moved at all.
After a roller-coaster week that saw the Pound plummet to a record low, we see the British Pound moving away from those levels. During the early morning session, the British Pound was trading near the most substantial level of the week, and it was also trading right near the level before the Exchequer Chancellor started to announce the latest tax cuts. Kwasi Kwarteng began his address last Friday by proposing massive tax cuts for the United Kingdom.
Sterling has increased by almost 8% from its all-time low of $1.0350 set early Monday to trade at $1.1168 in early Asian trade. Traders and investors believe that the current action taken by the Bank of England under which they will buy the bonds with unlimited capacity for a limited time has positively influenced gilts, and the move taken by the bank is claiming the anxieties of investors.
Philip Lane, Chief Economist of the European Central Bank, said that policymakers would continue to raise interest rates for “many” more sessions as they normalise monetary policy in the eurozone. He made this statement yesterday at a conference co-hosted by the Cleveland Federal Reserve and the European Central Bank. He was referring to the level of interest rates that neither sped up nor slowed down the economy. “We’re definitely still below neutral,” he remarked. “We have a clear vision that we need to do more normalisation, but it’s going to take numerous sessions to achieve it,” he added, “because I do believe it’s vital not to overdo it in one or two meetings.”
The typical safe-haven, gold, has been out of look this week as the main focus has been on the strength of the dollar index. We have also seen investors pulling their money out of ETF funds, which is not so favourable for the price of the precious metal. Inflation and central banks’ policies are some of the few fundamentals that are very much underpinning the price of gold. Today we have significant data sets, such as the Eurozone’s CPI reading, that gold traders will closely watch. Inflation is still very much a one-way street, and this is keeping the price of gold from falling off a cliff.
Several Fed members will also be speaking later, but traders will be particularly interested in the US consumer confidence data. A drop in this data set will likely push the dollar index lower and create more intense chaos in the market, which may bring some shine back for the shining metal.
Brent and Crude oil prices are on track to record their first weekly gain in nearly five weeks as traders are betting that starting next week, they will hear more positive news from OPEC. The cartel will meet on October 5th, and it is widely anticipated that it will announce a production cut, given that we are experiencing a slowdown in global economic activity. Additionally, Hurricane Ian is still keeping the oil production in the US Gulf of Mexico on the low side due to the disruptions caused by it. The final and one of the most critical factors impacting oil price this week is that the dollar index has decided to move away from its recent highs.
BTC’s price continues to consolidate, which is immensely worrying for traders. There are two essential points that traders need to keep in mind. Firstly, you need to understand that the daily range of the BTC has been narrowed a lot, which is usually associated with a period of higher volatility. This means that we could potentially see a move to the downside. On the fundamental side, we have witnessed resignation by several top Crypto firms’ executives this week, and this means that something is cooking under the hood that many aren’t aware of. The bottom line is that the current price action tells one compelling story: this is calm before a big storm.
The Asian stock market mainly traded lower on the week’s last trading day. The Nikkei index decreased by 2.19%. The Shanghai index declined by 0.21%, while the KOPSI index decreased by 0.32%. The HSI index dropped by 0.07%.
Dow Jones and S&P 500: Market Breadth
The Dow Jones’ market breadth lost further momentum. 29% of the Dow Jones stocks are trading above their 200-day moving average.
The S&P 500 stock breadth also confirmed some more weakness in its momentum. 24% of the shares traded above their 200-day moving average.
Dow Jones Futures Today
The Dow Jones futures are trading lower today. In terms of economic data, investors will be the US Prelim Consumer Sentiment data coming out at 14:00 GMT. The number is expected to print a reading of 59.5, while the previous reading was also at 59.5.
The Dow Jones futures have also experienced a severe sell-off this week, giving up most of the gains they scored yesterday. The price is trading below the 50, 100, and 200-day SMA on the daily time frame, which confirms that bears are in the driving seat, and this sell-off is only a beginning. Given the pessimism, it is highly likely that we may see further sell-off in the price action in the coming days and today. However, the RSI is showing signs of being oversold, which may bring some of the bargain hunters back into the market.
The near-term support is 28,567, while the resistance is 35,871.
Stock Market Rally
The S&P 500 stock index closed lower on Thursday; the index moved lower by 2.11%. The utility sector led the index higher, and all 11 closed higher yesterday.
The Dow index fell on the second last trading day of the week; the Dow stocks moved the index lower by 1.54%. Two shares advanced, while 28 shares closed lower.
The tech-heavy index’s NASDAQ composite closed lower by 2.84% yesterday.