Stock Sell-Off Deepens as Latest US data backs Fed Stance
What Does It Cover?
- Hong Kong-listed tech shares led the falls, with an index of stocks in the region headed for its sixth drop in seven days.
- Futures for the Nasdaq 100 inched higher after a 2.5% slump in the underlying measure during US trading when a bleak outlook from chipmaker Micron Technology Inc battered sentiment.
- Third-quarter gross domestic product was revised to 3.2% — compared with a previously reported 2.9% advance — on firmer spending.
- Elsewhere in markets, gold little changed in Asia after falling 1.2% Thursday in the wake of the US economic data.
- Nasdaq 100 futures rose less than 0.1%. As a result, the Nasdaq 100 fell 2.5%.
- Latest US economic data back case for more rate hikes.
The benchmark indicator for the entire stock market is S&P 500’s performance. The NASDAQ index was ↓ by 33% in 2022. It meant that this was the 2nd bear market of the year.
According to the Dow Jones Market Data, this phenomenon has yet to occur since 2001. The logic of Bull Markets is that the stocks go up; and of the Bear Market, the stocks go down.
The Asian stocks dwindled after a sudden drop in US technology stocks. More economic data validating for the Federal Reserve to keep hiking interest rates set a downbeat tone.
Weakness was evident in Japan, Australia, and South Korea benchmark indexes. Market bubbles are sudden increases in stock prices far beyond their actual value. The origin of bull and bear markets has given rise to the cracks and crevices within the stock trade.
The three significant ruins or ills that the investors and the enormous trade companies have to fight are:
- Insider Trading
- Government corruption
- Other dishonest practices.
The investor’s confidence and wealth invested in the stock markets depend on the highs and lows of the trade fluctuations. As a result, the dollar index strength also witnessed a change.
The treasury yields pushed ahead and pushed up the policy-sensitive two-year yield. The Japanese benchmark 10-year yield saw a minute climb. The Government bond yields for Australia and New Zealand also saw a rise.
The US data painted a picture of a resilient economy, adding fuel to the concern that the Fed has a long way to go to subdue inflation. Initial jobless claims rose less than forecast in the week of 17th December, underlining the labor market’s strength.
The sudden hawkish move of the Bank of Japan persuaded Japanese investors to remove a fraction of the trillions of dollars stashed in foreign stocks and bonds. The Yen and the lock bond yields rose because of this action.
Consequently, the global borrowing costs lifted and dragged on the cooling economic growth, with eurozone bonds being vulnerable.
The dollar was on the front foot on Friday as solid U.S. economic data reinforced the need for the Federal Reserve to stay on its aggressive monetary policy tightening path and raised the odds of higher-for-longer rates.
Sterling rose 0.05% to $1.2043 after slumping to a three-week trough of $1.1993 overnight.
Stock Markets witness an upward and rewarding period, the flipside being Depression or Recession. The bull and bear markets; and the GDP of each country are the indicators or contributors to the stock market.
The analysts indicate a mild recession in the US, which might help or catapult the Asian markets.
Deutsche Bank said in a note, “Nike made progress moving through excess inventory in the region [North America] and ended 2Q with inventory up 54% year-on-year vs. 65% at the end of 1Q.”
FedEx Corporation (NYSE: FDX) also reported better-than-expected quarterly results and announced plans to cut a further $1 billion in costs, estimating total savings for fiscal 2023 of $3.7B from a prior estimate of $2.7B.
According to UBS managing director Michael Zinn, “The market isn’t pricing in the risk of a recession, and stocks still haven’t hit bottom.”
Zinn mentioned in an interview with CNBC on Thursday that the market probably hasn’t reasonably priced in the likelihood of a harder landing, the probability of an earnings recession.
He pointed to the latest round of corporate earnings reports, as some companies have reported disappointing figures and are anticipating more headwinds next year.
Other evaluators have warned the stock market will be hit with an earnings recession as firms continue to battle high inflation and persistent rate hikes from the Fed.
Bank of America, Morgan Stanley, and Deutsche Bank have all predicted a 20% stock crash next year as a recession takes hold of the economy.
- Published By Team Nation Press News
