Why US stock markets face tremendous downside pressures? – Stock Market News



Stock markets have been shaken this year by increasing fears concerning the global economic outlook. Persistent inflationary pressures, worries over recession, and the anticipation of aggressive monetary tightening have been largely weighing on investors’ risk sentiment, luring away liquidity from risky assets. Although many investors have been endorsing a buy the dip strategy in the past few days, it seems that the major US indices have not bottomed yet. So, let’s take a closer look at what has been driving the US indices lower lately.

It’s all about inflation

Last Friday, the April US CPI report hit the markets, with the inflation rate coming out at 8.3% on an annual basis, which was lower than the March figure of 8.5% but still topped market projections of 8.1%. Even though this was the first clue that inflation in the US is peaking, the stronger-than-expected reading crushed markets’ anticipation that the Fed could actually slow down its monetary tightening and perform a softer landing. Therefore, stocks received a significant blow as the expectation of higher interest rates is hurting both the firms’ valuations and access to ‘cheap’ funding.

But it's more than that, the explosive cocktail of high inflation and higher interest rates poses a broader threat to the economy. Firstly, considering the continuously increasing cost of living, the broader economic uncertainty, and the withdrawal of excess liquidity investors might prefer to play defence, curtailing their exposure to risky assets. Furthermore, as rising interest rates entrain bond yields higher, the average investor might tilt to fixed-income assets that would be now starting to provide a considerable return.

Energy crisis is here to stay

Russia’s war against Ukraine has heightened fears over global economic growth due to the world’s reliance on Russia for energy commodities. Most Western allies have been threatening Russia with stricter financial sanctions, which could include a total ban on Russian oil and natural gas imports if it continues its assault. This development would not only keep inflationary pressures elevated for longer, but it could also hurt manufacturing production.

Aside from that, the long-lasting war and the continuous threats of Russia to other countries have increased global uncertainty, leading to more volatility in stock markets as investors opt for a flight to safety via safe-haven assets. Therefore, the situation could get even worse for risky assets if the war spreads to other countries, while a potential ceasefire would improve investors’ risk sentiment.

China’s zero-Covid strategy

The Chinese government’s pursuit of zero-Covid policy has significantly slowed down manufacturing production and created global supply chain disruptions. In turn, this has led to rising costs for most enterprises all around the world, with many of them not being able to pass on increasing costs to their consumers. As a result, profit margins are getting squeezed, deteriorating firms’ financial performance, which eventually leads to disappointed shareholders selling their stakes.

Where will the downfall stop?

Taking a technical look at the Nasdaq 100, we could observe that despite the higher close in yesterday’s session the index is currently on a profound downtrend.

Should selling pressure intensify further, a potential reversal point for the price could be found at the 10.842 region, which is the 200% Fibonacci extension of the 13,031-15,219 up leg.

Pinakabagong Balita



How do Fed stress tests affect the outlook of the US banking sector? – Stock Market News


Technical Analysis – Alibaba stock edges higher, eyeing its 200-SMA


Stock market themes to watch in the second half of 2022 – Stock Market News

Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.

Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.

Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.

Gumagamit kami ng cookies para mabigyan ka ng mahusay na karanasan sa aming website. Magbasa pa o palitan ang iyong cookie settings.

Babala sa Risk: Maaaring malugi ang iyong kapital. Maaaring hindi nababagay sa lahat ang mga produktong naka-leverage. Mangyaring isaalang-alang ang aming Pahayag sa Risk.