Following a series of weak US economic data and disappointing tech earnings, market sentiment has soured significantly. The broader market sell-off was ignited by US weekly unemployment claims reaching their highest level in nearly a year, alongside a contraction in manufacturing data. This has sparked growing concerns among investors that the Federal Reserve may have delayed too long in cutting interest rates. Adding to the anxiety, lackluster outlooks from tech giants Amazon and Intel have heightened worries about the current elevated valuations in the tech sector, further exacerbating the risk-off sentiment. All eyes are now on the non-farm payrolls report due tonight, which could provide further market direction.
In Europe, UK bonds experienced a sharp rally after a closely contested vote by Bank of England (BOE) policymakers resulted in a 5-4 decision to reduce the Bank Rate by 25 basis points to 5%, marking the first rate cut since the pandemic began. This move has been seen as a response to the growing economic pressures and has provided some relief to the bond market.
The MSCI US index fell by 1.4% yesterday, with the information technology sector underperforming significantly, dropping by 3.4%. US Treasuries continued to gain following the Federal Open Market Committee (FOMC) meeting, buoyed by the weak economic data. The yield on the US 2-year Treasury fell by 10.9 basis points to 4.15%, while the 10-year Treasury yield dipped below the critical 4% level for the first time since February. The US Dollar Index saw a modest increase of 0.3%, while gold prices consolidated at USD 2,446 per ounce amid the recent dollar strength. Brent crude prices declined by 1.5% to USD 79.5 per barrel, as concerns over demand outweighed geopolitical risks.
Asian equity indices were broadly lower this morning, reflecting the global risk-off sentiment. Meanwhile, US equity index futures suggest that US stocks will open 0.8% lower, indicating a continuation of the bearish trend.
In the cryptocurrency market, Bitcoin has dipped below $64,000 but remains within its consolidation range. If the support level is breached, the 200-day moving average, located around $61,000, would be the next target for the bears. However, as long as Bitcoin trades above the 200-day moving average, the trend can still be considered bullish. Factors that could make Bitcoin more bullish include increased institutional adoption, favorable regulatory developments, and broader acceptance of cryptocurrencies as a legitimate asset class. Additionally, positive macroeconomic factors such as a weaker US dollar or lower interest rates could also provide a boost to Bitcoin’s price.
Source: https://x.com/anndylian/status/1819245796069724498
