Daily summary: Wall Street nears bear market at the end of volatile week

9:02 PM May 20, 2022

  • European indices ended the week above the breakeven mark. DAX gained 0.72% today, while CAC40 and  FTSE100 gained 0.20% and 1.19% respectively;
  • Negative sentiment prevails on Wall Street. All indexes except the Russell 2000 have fallen below their recent lows and are now trading at levels not seen since November 2020;

  • On the week, the Nasdaq and the S&P 500 were on track to book their seventh straight weekly loss and the Dow its eighth week of losses;

  • PBOC lowered its mortgage reference rate by a wide margin, the second cut this year;

  • Additional pressure on stock valuations has been put by Monkey Pox, which is beginning to spread in Europe. WHO has decided to hold an emergency meeting on the issue.

  • JPY and GBP are the best performing major currencies, while AUD and EUR lag behind.

  • Gold benefited from the worsening sentiment and the precious metal is currently trading at $1,845 while silver fell to $21.66.

  • US indices sell-off has put pressure on cryptocurrency valuations. Bitcoin returned below the $29,000 level and Ethereum fell below the $1,940 barrier.

Global indices started today's session in optimistic moods following news that China lowered its mortgage reference rate in order to provide support for economy affected by recent lockdowns. However moods started to deteriorate before end of the European session partially due to reports of new monkeypox cases in Europe. Also rising recession fears pushed U.S. stocks into a bear market. Dow Jones and S&P 500 fell to the lowest level since March 2021 while Nasdaq trades at level not seen since November 2020 as investors are still most concerned about the recession or stagflation scenario and the lack of action by the Fed to contain further declines.

DE30 broke above the upper limit of the 1:1 structure this week, however buyers have twice failed to break above the upper limit of the wedge formation around resistance at 14200 pts.  As long as price sits below this level, bears remain in control. DE30 resumed downward move in the evening amid broad market sell-off and is currently testing local support at 13875 pts and coincides with 50.0% Fibonacci retracement of the upward wave launched in November 2020. Source: xStation5

Start investing today or test a free demo

Open real account TRY DEMO Download mobile app Download mobile app

The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.