US open: Stocks fall further as stagflation fears grow
Fiona Cincotta May 19, 2022 9:00 AM
Stocks are extending yesterday's steep selloff as slowing growth and rising inflation fears hammer the market.
Dow futures -1.1 % at 32466
S&P futures -1.1% at 4057
Nasdaq futures -1.1% at 12418
FTSE -2.3% at 7506
Dax -1.78% at 14158
Euro Stoxx -2.5% at 3729
Jobless claims rise to 10 week high
Stocks sold off steeply in the previous session, with the Nasdaq closing over 4% lower and the Dow dropping 1100 as inflation and slowing growth fears roiled the market.
Today stocks are set to extend those declines as stagflation fears mount. Yesterday the impact that rising costs were having on company profits spooked the market, sending stocks tanking lower. Today weak data is highlighting the slowing growth narrative.
Jobless claims rose to 218k, up from 197k and well ahead of forecasts of 200k. This was the highest level for initial claims in 10 weeks, suggesting that the slowdown could be starting to affect the labour market.
The Philadelphia Fed manufacturing index also plunged lower to 2.6, its lowest level since June 2020 and a much larger than expected drop from 17.6.
The reality is no matter which way your turn, warnings signs are flashing.
Where next for the Nasdaq?
The Nasdaq has been forming a series of lower highs and lower lows. After running into resistance just short of the 20 sma at 12580, the price tumbled lower. The RSI supports further downside. Sellers need to break below 11700, the year-to-date low, in order to extend the downtrend toward 10960, the November ’20 lows. Any recovery would need to retake 12580 to form a higher high.
FX markets USD drops, GBP, EUR rebound.
USD is falling after strong gains in the previous session. While safe-haven flows lifted the greenback yesterday, today, the USD is tracking treasury yields lower.
GBP/USD is rebounding after yesterday’s steep 1.2% selloff, following data that showed that inflation jumped to 9% YoY.
EUR/USD is rising after ECB minutes were on the more hawkish side of the fence. Policymakers expressed concern about surging inflation, and some wanted to act without delay. Expectations are rising that the June meeting will be used as a platform for a July rate hike.
GBP/USD +0.6% at 1.2413
EUR/USD +0.5% at 1.0520
Oil falls on growth slowdown fears
Fears of a global economic slowdown are pulling oil prices lower on Thursday. Although Shanghai relaxing some lockdown restrictions kept losses limited.
With earnings starting to show the impact of rising input costs, fears of a global slowdown in growth have magnified. Slower growth means weaker oil demand pulling the price lower.
Even so, oil remains comfortably above $100, the key psychological level as the EU continues to try to get approval for its proposed Russian oil ban, with Hungary still critical of the plan.
US inventories fell last week in an unexpected drawdown.
WTI crude trades -1.04% at $105.50
Brent trades -1.3% at $106.50
15:00 US Existing home sales
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.