The dollar lacks safe-haven demand despite risk aversion continues to dominate global financial markets
US stock markets fell sharply in a broad-based sell-off on Wednesday as recession worries came back into investor focus. Target shares slumped nearly 25% after the retailer revealed disappointing quarterly earnings, citing higher costs for fuel. Lowe’s gave up more than 5% after missing sales expectations in its first quarter. The Dow Jones shed 3.57% to post its biggest loss in two years. The S&P 500 fell 4% while the tech-heavy Nasdaq Composite slipped 4.73%.
Following suit, Asian equities plunged on Thursday. MSCI’s broadest index of Asia-Pacific shares outside Japan slumped 1.8% after four days of gains. Japan’s Nikkei 225 lost 1.89%. Tech giants listed in Hong Kong led the losses, with the Hang Seng index falling 2.54%. In individual stocks, shares of Tencent sank more than 6.5% after the company reported no revenue growth in the first quarter.
European stocks opened lower today as fears over inflation continued to rattle markets. The pan-European Stoxx 600 fell 1.6% in early deals, with all sectors sliding into negative territory. Adding to inflation worries, UK data showed on Wednesday that inflation soared to a 40-year high of 9% in April. Investor focus now shifts towards the ECB’s minutes of its April policy meeting.
In currencies, the USD index surged on Wednesday but failed to regain the 104.00 mark that now represents the immediate barrier for dollar bulls. The buck struggles for direction today, lacking the safe-haven demand despite risk aversion continues to dominate global financial markets. EURUSD was rejected from the descending 20-DMA yesterday to settle below 1.0500 again. Euro’s recovery attempts still look indecisive, with bearish trend staying intact both in the near and medium term.