- Major European indices finished today’s session lower, with DAX falling 1.59% and CAC40 dropped 1.39% brought down by retail and tech stocks as US inflation reading and ZEW Economic Sentiment Index for Germany weighed on market sentiment.
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Meanwhile EU may propose revenue cap for non-gas energy producers at 180 euros per mWh, according to Reuters
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Wall Street's sell-off deepens today, with the Dow plunging 2.60% and the S&P 500 and the Nasdaq losing 3% and 4.1% respectively. Investors expect a more aggressive Fed after hotter than expected inflation reading for the US.
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Monthly CPI unexpectedly rose 0.1%, against analysts' expectation of a 0.1% contraction, and the headline fell only to 8.3%, while markets expected 8.1%. Money markets have priced in a 75 bp hike next week and placed almost 45% odds on 100 bp, according to Bloomberg.
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US 2 year yield jumped to 3.737% which is the highest level since October 2007, while 10 year yield is at 3.429% and moving toward the swing hi from June 13 at 3.497%
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Oil prices also took a hit on Tuesday after recent data showed that emergency oil reserves in the US fell to the lowest level since October 1984..WTI fell nearly 3.0% and broke below $85.50 per barrel, while Brent lost 2.90% and is testing $92.00 per barrel.
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Oil demand will increase by 3.1 million bpd in 2022 and by 2.7 million bpd in 2023, unchanged from last month, according to OPEC monthly report. Last month OPEC output rose by 618k bpd to 29.65 mbpd with Libyan outages ending.
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The dollar index jumped above 109.50, from session lows of 107.7 amid general risk aversion. The biggest selling activity was against the Japanese yen, which returned above 144, the lowest since July 1998, and Antipodean currencies which pulled back to 2-year lows. At the same time, the EURUSD pair again tested parity level and the pound is heading towards 37-year low.
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Precious metals retreated from recent highs on the strength of the US dollar. Gold prices are down more than 1% today and are struggling to maintain the psychological barrier of $ 1,700. We observe a particularly large sell-off on the palladium market, where price plunged over 6.0%.
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General risk aversion had its impact on the cryptocurrency market. Bitcoin is trading 6.5% lower and Ethereum is down 5.0%. The crypto industry is focusing on Ethereum's "Merge," a highly anticipated upgrade that is expected to be completed around Thursday, September 15th.
Silver is holding surprisingly well compared to other assets. Price fell nearly 1.50% and buyers are becoming more active. Nevertheless as long as price sits below psychological resistance at $20.00, the main downward trend may resume. Source: xStation5
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