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Opening Bell: Growing Recession Fears Pressure Futures, Europe Stocks; Oil Rises


  • Recession concerns escalate

  • ECB rate hike likely

  • Global bonds sell off

Key Events

US futures on the , , , and edged lower on Wednesday and European stocks extended a decline on continued worries that a recession is likely even as angst on inflation and tightening monetary policy continues.


Oil keeps moving higher.

Global Financial Affairs

Though all US contracts were sold off, futures on the Russell 2000 underperformed. It is interesting to note that contracts on the NASDAQ 100 didn't drop any more than those on S&P 500 or the Dow.


Tech futures and stocks tracked Chinese tech giants Tencent (HK:) and Alibaba (HK:) which rallied in Hong Kong on speculation that Beijing will end its regulatory crackdown on the technology sector.


In Europe, the Index initially advanced this morning but the rally petered out, reversing into a decline after Credit Suisse (SIX:) of a second quarter loss, driving the down 0.7%.


Rising oil prices lifted energy stocks, capping losses for the European index. Retailers also outperformed after Inditex (BME:) surged 4.1% after showing an 80% increase in net profit for the February-April period.


ITX Daily

ITX completed a bullish flag that may have helped the stock bottom out, bouncing off the March 2020 lows.


Earlier Wednesday, Asian stocks advanced with the Chinese tech rally. New approvals for an array of video games increased optimism that regulators are prepared to ease the recent crackdown on internet companies. Still, the regional tech index closed off intraday highs, demonstrating bearish resistance.


Hong Kong's blew past the competition, surging 2.22%, more than three times the gains of China's , the second-best performer in the region.


Hang Seng Daily

The index reached its highest level since Apr. 6. If it registers higher than its Apr. 4 high, it will have posted the second ascending peak required to establish an uptrend.


Yesterday, US stocks climbed for the second day, with the wiping out all of last week's losses.


was the only sector in the red, on Tuesday, falling 0.25% after US discount retailer, Target (NYSE:) its profit outlook for the second time in three weeks due to inventory surplus. The sector surged 3%, rising far ahead of the second-best gainer , +1.3%.


Advances for shares of Apple (NASDAQ:) and Microsoft (NASDAQ:) pulled the higher, offsetting a selloff of Amazon (NASDAQ:).


Investors remain worried that the Fed will be forced to continue its aggressive monetary tightening policy and swiftly rising interest rates combined with a sharply reduced money supply will trigger a recession.


The market will be closely watching Friday's US release for clues on how aggressively the Fed will continue its policy after hiking rates by 50 basis points at its last meeting. That was the biggest hike since 2000.


Meanwhile, some traders are that the ECB might hike rates more assertively this year starting with a hike at tomorrow's in order to rein in inflation in the Eurozone.


Treasury yields on the note rebounded, along with global sovereign bond yields, after yesterday's fall. Investors are selling off bonds in anticipation of higher yields as rates move higher.


The climbed to the highest since May 20 but still found resistance.


Dollar Index Daily

The greenback has been churning at the same levels, which could keep the USD within a Falling Channel. On the other hand, if it overcomes this level, it may return to its previous .


was little changed, having been ranging since the May 24 high.


Gold Daily

The yellow metal is trading within a Falling Channel.


dropped for the second day within a bearish pattern.


Bitcoin Daily

The digital token has been trading within a pennant, which probably will turn into a Symmetrical Triangle. A downside breakout would another leg down, which could trigger a collapse in the space.


climbed to the highest level since Mar. 8, after two bullish patterns.


Oil Daily

Up Ahead

  • On Friday, Chinese data is released.

  • US are published on Thursday.

  • Canadian figures are printed on Friday.

Market Moves

Stocks

  • The MSCI Asia Pacific Index rose 1%

  • The MSCI Emerging Markets Index rose 1.3%

Currencies

  • The rose 0.2% to $1.0720

  • The rose 1% to 133.99 per dollar

  • The fell 0.4% to $1.2537

Bonds

  • Germany's yield increased to 1.34%

  • Britain's yield rose two basis points to 2.26%

Commodities

  • rose 1.1% to $122.01 a barrel

  • fell 0.3% to $1,847.07 an ounce