Stocks, oil, and gold fell, U.S. equity futures wavered while the U.S. dollar was slightly up against other currencies today, Monday. Market sentiment has been affected by a dimming economic outlook and fears that hiking interest rates could tip global economies into recession.
In the U.S., declining business activity and mixed earnings reports from big companies left U.S. shares dropping on Friday. On Sunday, U.S. Treasury Secretary Janet Yellen said that the nation’s economic growth is slowing, an economic downturn was unavoidable, and acknowledged that recession is a possibility.
In Asia, drops in Japan and Chinese technology shares led Asian equities down. S&P 500 and Nasdaq 100 futures barely didn’t record losses while European contracts fell.
U.S. Dollar Holds its Ground
The U.S. Dollar edged up against major Asian currencies on Monday morning in Asia. The greenback was supported as traders are seeking for safety and preparing for another sharp U.S. interest rate hike this week amid a slowing global economy. Investors are concerned a shaky economy can only withstand a certain number of rate hikes but have not yet taken the U.S. dollar down away from recent record highs as the global outlook remains unclear.
Gold was down today, Monday, in Asia, as investors are expecting a 75-basis point interest rate hike by the U.S. Fed this week. In other precious metals, silver, platinum, and palladium fell, with palladium recording the highest loss out of the group of three.
Oil Continues Selloff
Oil prices dropped on Monday morning in Asia as investors weighed in on the possibility of another interest rate hike by the U.S. Federal Reserve harming fuel demand. Today’s drop extends a recent selloff sparked by concerns that higher interest rates, could limit economic activity and cause fuel demand growth to decline.
Declining Europe Growth
A 50-basis point interest rate increase by the European Central Bank marks the first increase in 11 years. The Eurozone composite purchasing managers index fell into negative territory for the first time since March 2021, revealing that growth in Europe is on a slowing path.
The Fed to Hike Interest Rates Again
Based on the latest U.S. Federal Reserve officials’ statements, investors expect the U.S. central bank to raise interest rates by at least 75-basis points as inflation remains at high levels. The policy decision will be announced this week and the following statements by the FOMC, and Fed Chair Jerome Powell will be taken into consideration as investors fear that this sharp tightening could lead the world’s largest economy into recession.
What to Watch out for this Week:
Throughout the whole week:
Apple, Meta, Amazon, Microsoft, Alphabet earnings reports
Bank of Japan minutes
IMF’s world economic outlook update
E.U. energy ministers’ emergency meeting
Fed interest rate decision
Fed policy decision briefing
US consumer income
University of Michigan consumer sentiment