Concerns about the effects of the government shutdown, weak data readings from the University of Michigan, and a retreat from risk are leading to an extension of the correction on Wall Street.
- US100 contracts are losing about 1.9%, while Russell and S&P 500 contracts are down over 1.3%.
Since the beginning of the week, we have observed a noticeable decrease in investors' risk appetite and a general deterioration in sentiment. The market now expects not only Capex and promises from technology and AI giants but also monetization strategies and returns on investment in the perspective of quarters, not years.
The situation is worsened by the US government shutdown, which has already become the longest in history. Previous episodes of this type ended with limited impact on the economy, but the situation is becoming increasingly serious, as confirmed by comments from Kevin Hassett, one of the main economic advisors to the White House. Hassett states that the effects of the shutdown are "much worse than expected." A similar view is held by Scott Bessent, who claims that a large part of the US economy is already realistically in recession. These concerns are also shared by the Speaker of the House of Representatives, Johnson. The lack of a quick address to the American budget problem could push indices significantly lower if further risks materialize.
Additionally, the market has learned the results of the University of Michigan report on consumer sentiment and inflation expectations, which also does not allow for an improvement in market mood. The University pointed to a deterioration in sentiment among consumers in all segments. A particularly large decline was noted in "current conditions." These readings are particularly important in conditions of limited access to macroeconomic data due to the government shutdown.
The accumulation of these factors is bringing American indices to their lowest levels in over a month.
US100 (D1)
Source: xStation5
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