Markets remain concerned that further monetary tightening from the Fed will push the economy into a recession
US stock markets finished lower overnight to come back under pressure following a short-lived rally seen earlier in the week. The Dow Jones fell 1.05%, the S&P 500 declined 1.45%, while the Nasdaq Composite was 2.18%. Tech shares were among the loss leaders as investors remained concerned that further monetary tightening from the Fed will push the economy into a recession. So far this month, the Dow is down 4.5%, while the S&P 500 and Nasdaq have lost 6.3% and 8.7%, respectively.
Following suit, Asian equities fell on Friday as strong US data revived fears the Fed will have to retain its hawkish stance to combat inflation. Following two-day winning streak, MSCI’s broadest index of Asia-Pacific shares outside Japan slid nearly 0.7%. Adding to a more downbeat tone in the region, China faces a surge in infections after Beijing abandoned its strict zero-COVID policy to contain the virus. On the data front, Japan’s core consumer inflation in November hit a fresh 40-year high of 3.7%.
Meanwhile, gold prices rallied earlier in the week to stop just a tad below late-June highs registered last week around $1,825. The bullion failed to challenge the barrier and saw some profit-taking instead to settle below the $1,800 psychological level ahead of the weekend. During the recent retreat, the XAUUSD pair found support around $1,785 where the 20- and 200-DMAs converge. Gold tries to regain the upside bias ahead of the weekend, but investors look indecisive at this stage.
In currencies, the USD index is back on the defensive after some gains seen yesterday in response to fresh economic data out of the United States. The country’s GDP rebounded faster in the third quarter, rising 3.2% against the previously estimated 2.9%. A separate report showed that new claims for unemployment benefits increased less than expected last week. Upbeat figures potentially set the Federal Reserve on a path to keep raising interest rates, thus supporting the buck. The DXY briefly advanced to 104.60 before retreating marginally on Friday.
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