- European indices closed today's session in mixed moods, with the German DAX finishing almost flat as rising tensions between Russia-Ukraine tensions, rising rates and a worsening outlook for corporate profits weighed on market sentiment. ECB member and Bank of France's head Francois Villeroy de Galhau was among the latest policymakers to echo the need to keep raising interest rates to bring inflation back down to the 2% target.
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US indexes launched slightly higher on Monday, however upbeat sentiment quickly faded away and all three benchmarks are trading in red. Volatility is subdued due to Columbus Day and investors seem to be cautious ahead of key earnings and inflation reports this week that should provide more details on the current state of the US economy. Dow Jones fell 0.60%, while S&P500 and NASDAQ lost 1.08% and 1.55% respectively, lowest level since September 2020.
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Semiconductor stocks including Nvidia and AMD took a hit after White House published a sweeping set of export controls that limit companies selling advanced computing semiconductors and manufacturing equipment to China.
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Fed's Evans said the US can lower inflation relatively quickly without recession or large increase in unemployment. On the other hand, he points out that many risks could derail Fed hopes for soft landing including the Ukraine war, slow supply improvement, Covid, and monetary policy either not fixing inflation or weighing more than expected on jobs.
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Fed's Brainard sees a limited 2H GDP rebound, with GDP growth remaining flat this year. For a while, monetary policy will be restrictive. Cumulative tightening will take time to bring inflation down.
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JPMorgan CEO Dimon, expects recession in the US within 6-9 months from now and warns that stocks could fell 20.0% from current levels
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Oil prices fell over 0.20% as China's services activity in September contracted for the first time in four months, suggesting that recent coronavirus-induced restrictions continued to hit the world's second-largest economy and oil consumer.
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Precious metals also pulled back as USD regained momentum. Gold plunged below $1670.00 per ounce, while silver fell below psychological support at $20.00 per ounce.
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The dollar index strengthened for a fourth consecutive session to above 113 on Monday, as investors continue to bet the Fed will move ahead with its tightening plans. GBPUSD resumed downward move while the BoE announced it would increase its long-dated, temporary, gilt market purchase program from a daily maximum limit of £5 billion to £10 billion for the rest of the week. Currently USD and CAD are the best performing major currencies while NZD and AUD lag the most.
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Risk-off sentiment also pushed prices of major cryptocurrencies lower. Bitcoin once again is approaching support at $19000, while Ethereum is trading near $1300 level.
Ethereum price stuck in local consolidation. Looking at the H4 interval, a triangular formation may be forming. Should a price breach any of these barriers, a larger trend should appear. Taking into account recent bearish sentiment, a downward breakout appears to be the more likely scenario. Source: xStation5
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