Spreadex Market Update
Risk sentiment weakened by China lockdown fears
Equities drop on fresh USD strength & China Covid fears
Equities markets are seeing a much quieter open against a backdrop of fresh USD strength and renewed China lockdown fears. With bond yields creeping higher again over the back end of last week. This week, attention is likely to be on the latest round of PMI data due out of the US, UK and EZ. With global recessionary fears still a key headwind for risk assets, any further weakness in these readings will no doubt cause some drag on stock valuations leading equities indices lower near-term.
King Dollar once again
In FX, the uptick in the US Dollar today has reversed some of the recent themes we’ve seen as risk currencies unwind further. However, it’s EUR which is seeing the worst performance across the European open on Monday. EUR had been one of the key beneficiaries of the
Safe havens rallying
USD sell off and so the subsequent rebound is hitting the single currency hard. Along with the strength we’re seeing in USD, safe havens are rallying today amidst the weaker tone to risk markets. Both JPY and CHF are seeing better demand on Monday and with a quiet data sheet today, USD flows look likely to remain the key market driver. Tomorrow’s PMI data sets will be key to watch with any fresh weakness likely to underscore the support for safe havens we’re seeing today.
Metals & Oil fall as USD rallies
In the metals and commodities space, both gold and silver have turned sharply lower. The metals complex had enjoyed sizeable gains on the back of a weaker US October CPI reading but with USD rallying again now, these gains are being quickly erased. Oil prices are coming under pressure at the start of the new week also as fears over fresh Covid lockdowns in China are dampening the demand outlook.
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