Markets fell on Wednesday.
The S&P 500 fell 0.7 percent, the STOXX Europe 600 tumbled 1.4 percent and the Nikkei 225 fell 1.2 percent.
Market sentiment was weighed down by comments in Chinese newspapers that it could squeeze its supply of rare earth elements to hit the US.
Meanwhile, the global economy may already be headed for a downturn.
George Saravelos, global head of FX research at Deutsche Bank, wrote in a note: “Stock prices of the semiconductor sector tend to lead the global manufacturing PMI by one to two months and yesterday made a new low.”
Indeed, the US 10-year Treasury yield has fallen about 30 basis points since 30 April and now trades at its lowest since September 2017.
The movement in US Treasuries contributed to Morgan Stanley announcing on Tuesday that it is now “‘in the zone’ for a recession watch”.
While the US stock market has been relatively resilient in the face of the US-China trade tension, Brett Arends at MarketWatch noted that the S&P 500 is now “just a few points away” from its 200-day moving average. Arends suggested that the index falling to that level “would trigger a closely watched sell signal, potentially setting off a broader alarm, selling pressure and further falls”.
And the European Central Bank said in its latest Financial Stability Review released on Wednesday that “US equity prices look stretched and may be subject to further adjustment”.
No comments:
Post a Comment