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Markets full of fear as data suggests recession is close

US dollar faces selling on all fronts as data suggests there may be a recession coming soon. Markets all in red, except gold, which holds its value.

Dollar lost its footing as rates were hiked all over the world

With a gloomy market climate, the US Dollar ends Wednesday with losses against the majority of its key competitors. Although the slide was stopped, it is obvious that the situation for the American dollar has altered and that further declines are now on the agenda.

China announced a number of actions earlier in the day to loosen coronavirus restrictions, departing from the zero-Covid policy. However, the macroeconomic data was depressing. The November Trade Balance showed a $69.84 billion surplus, with imports down 1.1% and exports down 8.7%. The dismal numbers increased worries about the state of the world economy.

The US Dollar gives up the gains from the previous day as the dollar index advances into a crucial level of resistance ahead of the 106 level. The New Zealand Dollar is up about 0.75% on the day so far after rising from a low of 0.6309 to a high of 0.6384.

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As US worker productivity data topped expectations but maintained a dismal trend, world equities fell further, and Treasury yields decreased on Wednesday. This is further clouding the argument about how quickly and how far interest rates will climb in the United States.

Productivity increased more quickly than anticipated in the third quarter. According to economists, the figure indicated high labor costs and persistent inflation, increasing pressure on the Federal Reserve to maintain hiking rates.

Stocks extend losses over gloomy economic outlook

The S&P 500 and Nasdaq fell, adding to the sell-off from the previous day caused by predictions of an impending recession from three big US banks. Given that the rate of future inflation is unpredictable, concerns about how sticky inflation may be have increased uncertainty regarding the Fed’s policy course.

On Wall Street, the Nasdaq Composite fell 0.4%, the S&P 500 lost 0.11%, and the Dow Jones Industrial Average increased by 0.05%. The Bank of Canada gave a message that its historic tightening campaign was about to come to an end. With the increased interest rates by 50 basis points to 4.25% on Wednesday, the rate is the highest level in nearly 15 years.

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The Reserve Bank of India earlier paused the rate hikes by raising its benchmark lending rate by 35 basis points to 6.25%. RBI issued a warning that inflation could continue to be widespread and high.

Bulls in the oil market never seem to get a break

The United States’ oil inventory data revealed a significant increase in petroleum products that offset the country’s weekly draw in crude. As a result, oil prices fell for a fourth straight day, ending close to a year low.

West Texas Intermediate, or WTI crude, for January delivery decreased $2.24, or 3%, to settle at $72.01 per barrel. WTI hit a session low of $71.75, which was the lowest price since its $70.80 trough on December 22nd, 2021. Since its most recent positive closing of $81.33 on December 1st, the US crude has dropped by over 12%. The benchmark is down approximately 11% so far this week.

Brent crude for February traded in London fell $2.18, or 2.8%, to end at $77.11. It previously hit a session low of $76.95, the lowest price since its bottom of $75.75 on December 27th. Brent is down nearly 10% for the week.

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The price of gold is up on the day, rising from a low of $1,768.82 to a high of $1,789.05 so far as the US dollar weakens in the middle of the US trading day.  As per usual, silver followed its big brother’s footsteps with gains. Silver futures for March 23rd closed at 22.883 or +0.548 which is +2.45%.

Tomáš is a financial reporter with US markets as his main field. Tomáš is an aspiring author and entrepreneur aspiring to help people get better in financial knowledge.


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