The overall tone among global investors looks tepid
After a short-lived relief rally, Wall Street stocks came back under selling pressure as recession fears intensified, sending the S&P 500 to a new low for the year. The S&P 500 declined 2.1%, the Dow Jones Industrial Average plunged 1.54%, and the tech-heavy Nasdaq Composite fell 2.84%. Leading the losses, shares Apple, gave up nearly 5% after Bank of America downgraded the stock from buy to neutral and cut the price target from $185 to $160 per share, citing the anticipated weaker consumer demand over the next year.
In Asia, equities slumped on Friday as risk aversion reemerged in month-end flows amid continued hawkish signals from major central banks. Japan’s Nikkei 225 was the worst-performing regional benchmark during the session even as fresh data showed that retail sales and industrial production exceeded expectations in August. The index finished 1.83% lower, losing nearly 8% in September. The Shanghai Composite shed 0.54% after official data also showed that China’s non-manufacturing sector grew at a slower-than-expected pace in September.
In Europe, stocks opened slightly higher today, with the overall tone looking tepid as investors continue to express fears over slowing growth and aggressive monetary policy tightening. Volatility in the regional markets has ebbed somehow after a rout witnessed earlier in the week in response to the Bank of England’s intervention in the bond market to stabilize the UK economy. Now, market players shift their focus towards the US PCE report due later in the day. Should the Fed’s preferred inflation gauge confirm the elevated inflation, the selling pressure surrounding stocks may intensify ahead of the weekend.
The dollar, meanwhile, has steadied around 112.00 after strong rejection from two-decade highs seen around 114.80 earlier in the week. The greenback is unlikely to see a deeper retreat in the near term and could resume the ascent instead should the PCE data add to investor concerns over the Fed’s aggressive policy. EURUSD bounced off the 0.9535 zone to get back to the 0.9800 zone, followed by the 20-DMA that arrived just below 0.9900. Despite the recovery, the shared currency is unlikely to regain parity any time soon.