Stocks Sank As Recession Fears Returned

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).

G8 CURRENCIES SENTIMENTS

** ST refers to Short-Term daily turnover, MT is Medium Term weekly 
and LT refers to Long-Term monthly turnover.

WALL ST MOST ACTIVE

** % Change here refers to price vs previous day price

WALL ST TOP FLOWS

** % change here refers to volume vs. 20 days average volume.

TOP 5 BLOCK ORDERS

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.

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