S&P 500: Bad start after the worst semester in decades

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  • Equity markets remain depressed and the dollar firm.
  • Sovereign bond yields on the rise, in response to the demand for refuge and relief in expectations of monetary tightening.
  • Metals under pressure, at lows in months.

After closing the worst semester since 1970, US stocks point to a negative start for the second half of the year, due to fears of a recession. The dollar and sovereign bonds on the rise, while metals are under pressure.

Fears continue to dominate, increasingly justified

The S&P closed Thursday down 0.88% and ended the semester down 20% in the red, the worst since 1970. On Friday, in the pre-open, futures fell 0.57%. In Europe, the main markets fell 0.25% on average.

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The cautious climate continues to dominate the tone of the markets. The context of economic data showing a slowdown in economic growth and rising inflation continues to complicate economic expectations. The positive data from China that became known is not enough to change the mood.

The Atlanta Fed’s GDPNow index used as an estimator of GDP growth points to a 1% contraction in the economy during the second quarter. If so, it would be two quarters with negative numbers, which is usually considered a recession.

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According to preliminary data, the Eurozone consumer price index rose to 8.6% (yearly) in June, beating expectations and setting a new record. The data adds more pressure to the European Central Bank to adjust monetary policy.

The key US data on Friday will be the ISM Manufacturing. The final reading of the S&P Global Manufacturing PMI will also be released. Monday will be a US holiday.

The context of risk aversion continues to boost the dollar and the yen. The rises of these two currencies are widespread on Friday, encompassing those of the G10 and those of emerging markets. The DXY trades in the 105.00 zone.

The sovereign bond yields continue to decline. The tranche of the 10-year Treasury bond is at 2.91%, and the German one at 1.28%, both at lows since early June.

The Petroleum manages to climb despite the bad expectations. Prices climb almost 3% pushed by supply problems, with a focus on Libya and in advance of production cuts in Norway.

Despite the drop in yields, the Prayed continues to decline and trades at lows since January at $1785. Silver loses nearly 3% to a two-year low below $19.60. The winter of cryptocurrencies continues. Bitcoin had a strong rebound in Asian hours, but after approaching $21,000 it changed direction and is back near $19,000.

The Wall Street Journal reported that Kohl’s ended talks to buy Franchise Group short due to rising interest rates and uncertainty about the sector. Kohl’s shares fall nearly 20% in premarket. Those of Amazon lose 0.38%, Apple yields 0.72% and Nvidia falls 2.18%. Among the companies that will present results on Friday are nomadicY weathernews.

Technical levels

SP500

Panorama
Last Price Today 3764.78
Today’s Daily Change -25.18
Today’s Daily Change % -0.66
Today’s Daily Opening 3789.96
Trends
20 Daily SMA 3864.64
50 Daily SMA 3998.47
100 Daily SMA 4200.67
200 Daily SMA 4390.99
levels
Previous Daily High 3816.45
Previous Daily Minimum 3737.5
Previous Maximum Weekly 3911.55
Previous Weekly Minimum 3680.14
Monthly Prior Maximum 4181.86
Previous Monthly Minimum 3636.65
Daily Fibonacci 38.2% 3767.66
Daily Fibonacci 61.8% 3786.29
Daily Pivot Point S1 3746.16
Daily Pivot Point S2 3702.35
Daily Pivot Point S3 3667.21
Daily Pivot Point R1 3825.11
Daily Pivot Point R2 3860.25
Daily Pivot Point R3 3904.06

Source: Fx Street

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