Sep. 27, 2022, 5:00 AM +05:00
VOT Research Desk
Key Insights
Beginning with the British Pound’s record low, futures on the Dow Jones Industrial Average, S&P 500, and Nasdaq 100 sank, putting global monetary tightening bets on South Korea’s KOSPI Index and Hong Kong’s Hang Seng Index at risk.
Wall Street was plagued by market volatility to begin the new trading week, continuing the pattern seen last week.
The Dow Jones futures closed down 1.1%, their lowest level since November 2020.In the meantime, futures on the Nasdaq 100 and S&P 500 plunged by 0.53 percent and 1.05%, respectively.
Worldwide financial fixing stayed the key topic driving securities exchanges lower.
All Treasury yields increased, with the 2-year yield reaching 4.35 percent. The longest winning streak since at least 1988 is 13 consecutive sessions of rising rates. It continues to reflect rising hawkish expectations regarding the Federal Reserve’s monetary policy. This shouldn’t come as a surprise because the markets still underpriced what the Federal Reserve said about interest rates in the future last week.
Additionally, volatility in UK-based financial assets preceded the move on Wall Street. Due to anticipated convergence of restrictive monetary policy and stimulatory fiscal policy overnight, the British pound briefly touched a record low. In response to the changes in the value of the pound, the Bank of England made it possible to raise interest rates more quickly, which increased expectations for global monetary tightening.
The sectors of the S&P 500 with the worst performance were real estate (-2.63%), energy (-2.57%), and utilities (-2.43%); see the chart below.
The 30-year mortgage rate rose to 6.29 percent, the highest it has been since 2008. This has had a particularly negative impact on real estate.
Technical Analysis of the Dow Jones The Dow Jones futures price broke through the February 2021 low and broke through the crucial 29552–29869 support zone.
That has made it possible for the dominant downtrend to continue.
The 123.6% Fibonacci extension at 28746 appears to be the immediate support level. The 20-day Simple Moving Average (SMA) may serve as resistance in the event of a move higher.
Tuesday’s Asia-Pacific Trading Session Could Be Pessimistic As a result of Wall Street’s volatility, Asia-Pacific stock markets may experience a negative trading session on Tuesday. The absence of notable economic events places traders’ attention on sentiment as a whole. The KOSPI Index of South Korea and the Hang Seng Index of Hong Kong may be at risk as a result of this.
