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

19:02 20 May 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

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