Daily summary: Recession risks continue to weigh on markets

9:01 PM December 7, 2022

  • Major European indices extended recent losses, with DAX closing 0.57% lower as investors continued to weigh persistent fears of a global recession, while disappointing Chinese trade data overshadowed Beijing's moderation of Covid restrictions. 
  • On the data front, revised Q3 GDP reading showed that the eurozone economy expanded more than previously estimated, but the block is  expected to fall into a recession at the beginning of 2023.

  • Wall Street indices are swinging between gains and losses in a volatile session as uncertainty around Fed future actions and recession concerns keep traders on edge. The chief executives of America's biggest companies, including JPMorgan Chase CEO Jamie Dimon, are feeling increasingly sour about the health of the US economy as it deals with the twin shocks of inflation and rising interest rates. 

  • On the data front, Labor Department data showed that productivity in Q3 topped estimates, while unit labor costs were significantly lower. 

  • Oil prices fell over 2.0% on Tuesday to the lowest level since the beginning of the year as rising demand concerns overshadowed a bigger than expected drop of US crude stocks and potential new EU sanctions on  Russian energy and mining sectors. Brent dropped below $78.00 level while WTI tested $72.25 mark. 

  • Precious metals rose amid a weaker dollar. Gold gains over 1.0% and is testing major resistance at $1790 per ounce, while silver bounced off key support at $22.00 currently oscillates around  $22.75 level.

  • This dollar's weakness was seen across the board, with some of the most pronounced selling activity against the Euro and the British Pound. The USDCAD pair briefly dropped below support at 1.3600 after BoC lifted interest rates by 50 bp to 4.25$ as widely expected, however does not rule out further increases. Currently NZD and GBP are the best performing currencies while USD and CAD lag the most.

  • Negative sentiment also weighed on major cryptocurrencies. Bitcoin retreated below $16800 level, while trades around $1230 mark.

GOLD is once again testing major resistance at $1790 per ounce, which is marked with previous price reactions and 200 SMA (red line). Source: xStation5

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