- Markets try to stabilize after sharp fall on Monday.
- Data from Europe contribute to fears of a recession.
- The dollar rises, but without much strength.
After Monday’s crash, Wall Street futures point to a stabilization and not much else. Caution prevails and economic data from Europe did not help. Most European stock markets trade in the red. Metals do not recover ground, the dollar rises modestly and oil recovers.
Still far from better
The S&P 500 ended Monday down 2.14% and the Nasdaq 2.55%; in Tuesday’s preview they rise 0.05% and 0.13% respectively. In Europe, the FTSE 100 fell 0.75%, the DAX lost 0.16% and the CAC 40 lost 0.34%.
Bad weather remains a dominant factor among operators. Fears of a global recession, plus high inflation, the energy crisis and the continuation of monetary tightening by various central banks continue to weigh on the markets.
Uneven slowdown in Europe
The preliminary estimate of the S&P Global PMI for August for Europe was published on Tuesday, showing clear signs of a slowdown, and on the positive side, with several figures above expectations. German PMIs remained in contraction (below 50), while the Eurozone services fell to 50.2 and manufacturing to 49.7. In the UK, the big news was the drop in manufacturing from 52.1 to 46 (vs. 51.1 expected). In the US the index will be released and is expected to show a drop to 51.58 from 52.2 in manufacturing and a rise in services from 47.3 to 49.8. The Richmond Fed index and new home sales data for July will also be released.
The key event of the week will be the symposium on jackson hole, which begins on Thursday and will feature presentations from several central bankers. On Friday it will be Jerome Powell’s turn. In the previous one, the yields of the Treasury bonds remain in the zone of maximums in weeks, before expectations of more monetary adjustment.
The 10-year US bond yields 3.02%, while the 30-year 3.31%. This is a contributing factor to the weakness of the Prayed. XAU/USD fell to almost four-week lows below $1,730 on Monday (a week ago it was above $1,800). Silver also reached lows in weeks at $18.70 and for these hours it tries to return above $19.00.
The dollar it remains with some strength in the market in the context of pessimism, also accompanied by the rise in yields. DXY rises for the fifth day in a row and is above 109.00, near the highest in years. EUR/USD had the lowest close since 2002, and remains below parity and close to 0.9900. The Chinese yuan is at its lowest in almost two years against the dollar.
The pound was not significantly affected by the poor PMI figures, since despite this, expectations of more monetary tightening by the Bank of England remain firm.
The prices of Petroleum is rising more than 1.5%, following statements by the Saudi energy minister saying recent volatility could lead to a cut in production by the Organization of the Petroleum Exporting Countries and allies. The agreement between the US and Iran is closer according to reports, but there are still pending issues.
Among the companies that will present results on Tuesday are Nordstrom, Medtronic, Dick’s and Macy’s.
Technical levels
Source: Fx Street
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