Thursday, 3 October 2019

Markets fall, “growing risk the US economy falls into recession”

Markets fell sharply on Wednesday.

The S&P 500 fell 1.2 percent, the STOXX Europe 600 plunged 2.7 percent and the Nikkei 225 fell 0.5 percent.

“The very weak ISM, weak levels of (capital expenditure) plans, and inversion of parts of the US yield curve suggests a growing risk the US economy falls into recession,” Joseph Capurso, senior currency strategist at Commonwealth Bank of Australia, wrote in a note.

Some technical analysts are also concerned of further downside to the market.

Ned Davis Research chief global investment strategist Tim Hayes noted that the comeback in September is becoming “another round of failure”, pointing to a lack of breadth, slowing equity fund inflows and a failure of the yield curve to steepen.

MKM Chief Market Technician JC O’Hara said “the market is not in the best shape to make new highs from its current position” since “shorter term technical indicators started to show some negative divergences”.

Tribeca Trade Group CEO Christian Fromhertz noted: “On the technicals, you’re losing breadth a little bit … we’re starting to see more groups tilt to the downside.”

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