Stocks Dropped On Recession Fears

STATE OF THE MARKETS

Stocks dropped on recession fears. US stocks closed in the red on Tuesday as fears crept into the markets that the US economy might be due for a hard landing. The tech-laden Nasdaq (-2.00%) fell the most, followed by Russell (-1.50%), S&P (-1.44%) and Dow (-1.03%) as investors flock to bond’s safety that sent yields lower across the board. The shorter 2Y eased to 4.37% while the 10Y benchmark fell to 3.53% as the Dollar index continued to hold strong above the 105 handle.

In the commodity markets, crude oil continues to press lower amid recession fears and the black gold broke September’s low to settle near $74.55/bl as New York closed. Gold was holding strong above the $1770/oz mark as the Federal Reserve planned to slow down on rate hikes. Elsewhere, iron ore continues to climb higher near $108.50/tn as investors continue to weigh the China re-opening.

In the FX space, sentiments turned bearish as Swiss advanced further into the demand territories while Aussie and Loonie were sold off. Kiwi continue to reign in demand for medium and long term accounts while Sterling eased off on profit taking.

On Wednesday, markets expected to remain volatile as investors continue to position their portfolio ahead of the FOMC meeting next week, where the Feds is expected to raise 50 points of rates to 4.50%. Earnings releases to watch includes Brown Forman (BF), Campbell Soup (CPB), GameStop (GME), Descartes Systems (DSGX), Thor Industries (THO), Hashi Corp (HCP), United Natural Foods (UNFI) and Academy Sports (ASO) as well as the latest figures in the US mortgage applications, Productivity and labor costs. EIA petroleum status will be in the spotlight for energy traders.

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and LT refers to Long-Term monthly turnover.

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OUR PICK – AUD/USD

Recession fears may pressure commodities. With markets in fear of a recession that may trouble the US economy, China and  Australia would not be spared. Our sentiment model showed bearish Aussie/Dollar in the short and medium term.

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