Today's session brought massive declines on stock indices both in Europe and the USA. Buyers capitulated under the pressure of supply in the face of dismal data from the US economy. The CPI inflation reading of 8.6% turned out to be higher than expected. The fatal data reading also came from the University of Michigan, where the reading indicated around 50.2 points versus 58.1 expected. The reading turned out to be a record low and shocked market analysts. The indices have been performing nervously since the start of the session, the weak data unleashed additional supply and left buyers trapped. Concerns around a recession are growing.
The biggest declines are again seen on the technology NASDAQ, which is losing over 3.2%. The S&P500 is also doing terribly, down nearly 2.8%. Only marginally better is the Dow Jones industrial index, which is down 2.3%. European indices also had a very weak session. DAX fell by over 3%, London's FTSE by over 2.1%.
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Create account Try a demo Download mobile app Download mobile appCryptocurrencies have also ricocheted off, with Bitcoin losing over 2% and the second largest cryptocurrency Ethereum falling almost 6% and breaking through key support near $1,700. The sector is performing very poorly as a result of investor risk aversion and the era of more expensive access to capital.
As a result of fears surrounding a possible recession and slowdown in the global economy, crude oil prices have lost nearly 1%. We are also seeing declines in natural gas, which just recently came close to reaching new historic highs near $10.
Gold jumped to weekly highs today and posted gains of over 1%. Bullion prices first fell after inflation data from the U.S., but bulls gained strength shortly thereafter, benefiting from panic in the indexes and a record low sentiment reading from the University of Michigan.
The US dollar is strengthening, confirming a classic reaction to weak economic data, likely resulting in further monetary tightening by Federal Reserve bankers. The euro is weakening against the dollar. The EURUSD pair is approaching the 1.05 area. Japanese Yen is performing well. On the other hand, the broad market of the British Pound and the Euro is doing much worse.
Yields on 10-year US Treasury bonds are climbing above 3.14%.
Today's session showed that sellers' fears around a recession were not unfounded, and that hopes around monetary easing by Fed bankers may turn out to be the fragile scenario that bulls wanted to believe in. Next week will see decisions from central banks including the Bank of Japan, the Bank of England and the Swiss National Bank.
