Investors keep a cautious tone amid central banks’ hawkishness
Wall Street stocks finished sharply lower on Friday to notch a second consecutive week of losses amid rising fears of a recession as major central banks continue raising rates. Adding to investor concerns, the data showed that retail sales came in worse than expected last month. The Dow lost 765 points Thursday, or 2.3%, the index’s worst day in three months. The S&P 500 lost 2.5% and the Nasdaq tumbled 3.2%, their worst days in a month. The Dow Jones lost 0.85%, the S&P 500 fell 1.11%, and the tech-heavy Nasdaq Composite declined 0.97%. For the week, the S&P 500 fell 2.08%, while the Dow and Nasdaq slid 1.7% and 2.7%, respectively.
Asian equities fell across the market on Monday as risk aversion persisted at the start of the week. Investors keep expressing recession worries as global central banks continue to sound hawkish. Also on the negative side, China officially reported its first Covid death after the government relaxed restrictions nationwide. The Shanghai Composite Index lost nearly 2%, the Nikkei 225 in Tokyo lost 1.05%, the Hang Seng in Hong Kong shed 0.46% and the Kospi in South Korea gave up 0.33%.
Meanwhile, the US dollar is back on the defensive after the recent failed recovery attempt. The USD index dipped to fresh June lows around 103.45 last week before bouncing back above 104.00. AS the prices lacked the momentum to challenge the 105.00 figure, the greenback came under renewed selling pressure, staying negative despite risk aversion. The buck also failed to capitalize on the rally in the US Treasury bond yields across the curve.
Elsewhere, gold prices struggle for direction on Monday after a bounce from the 20-DMA last week. The precious metal now holds above both the 20- and 200-DMAs, trading marginally below the $1,800 psychological level. The bullion could challenge this figure should the dollar continue to fall in the coming days. On the other hand, the XAUUSD may need extra drivers to overcome this barrier as buyers stay cautious at this stage.
