Most global stock markets have traded notably lower over the past day as fears grow of more persistent inflation and higher interest rates.
- Glad stock markets had a tough day, led downwards by the US market, which saw the S&P 500 Index have its worst day in over 2 months and trade below the psychologically important 4000 level. The NASDAQ 100 Index closed lower by more than 2%. Fears are growing that rates will need to be raised to yet higher levels to bring persistent inflation down and this is hitting stocks. However, the S&P 500 Index made a golden cross the week before last. This is typically a strong long-term buy signal, although the price has fallen since then.
- The Reserve Bank of New Zealand raised rates as expected by 0.50% to a rate of 4.75%. The Bank is sticking to its hawkish tone, saying “all options are on the table” and that a smaller hike wasn’t even seriously considered. Despite this, the NZD/USD currency pair hardly moved following the announcement.
- In the Forex market, the US Dollar remains firm, climbing a little higher, as US treasury yields continue to rise. The 2-year treasury yield is close to its long-term high level closed at a record high yesterday but has declined during the Asian session. The New Zealand Dollar is the strongest major currency today, while the Australian Dollar is currently the weakest.
- Minutes of the most recent FOMC meeting will be released later today, which will be eagerly scanned by markets for clues as to the Fed’s thinking about inflation and rates.
- Some commodities are performing quite well, with some continuing to rise after having recently made significant bullish breakouts, notably Sugar and Cocoa. However, the price of WTI Crude Oil is showing some strongly bearish momentum as it trades lower.
- The Bank of Japan has announced an emergency bond buying operation.
- Canadian CPI (inflation) data released yesterday came in a bit lower than expected, with a month-on-month increase of only 0.5% compared to the 0.7% which had been forecasted.
- US and UK services and manufacturing data came in a little better than expected.
- Australian Wage Price Index data came in lower than expected, showing a quarterly increase of only 0.8% compared to the 1.0% which was expected.
- It is a public holiday tomorrow in Japan.
- Daily confirmed new global coronavirus cases decreased last week for the eighth consecutive week.
- Total confirmed new coronavirus cases worldwide stand at over 678.9 million with an average case fatality rate of 1.00%. Daily new confirmed cases have fallen to a low level not seen since May 2020, just after the start of the pandemic.