FX Careers

General Market Analysis || 27 September 2023

Stocks Slump Again Nasdaq and S&P Down 1.5%

US stock markets took another beating yesterday as the aftermath of last week’s Federal Reserve Bank meeting continues to exert pressure on markets and fresh data also suggested a pullback for the US economy. The Nasdaq and S&P took the brunt of the move closing down 1.57% and 1.47% respectively, with the Dow also taking a hit on the day, finishing 1.14% in the red. The dollar clocked up its fifth straight positive day and US treasury yields held at elevated levels despite dropping off decade highs seen in Monday’s trading. Oil prices came back bid having taken a breather in their recent drives higher with WTI back above $90 and Brent above $93 and Gold dropped further to trade back under $1,900/b.

Conditions are Lining up Nicely for the Bears

Markets have started to wake up to some stark truths over the last few days and some investors fear that the downside corrections that we have seen over the last week of trading since the latest Fed update could turn into a more sustained trend. There are a few indicators that suggest we may have seen our highs for stocks for the year. There is no doubt that stocks have been rallying nicely over the last 9 months in hopes that interest rates will start to come down sometime in the near future, but last week’s Fed statement and consequent updates from FOMC members have now got the market adjusting to higher rates for longer. Moves have been substantial but also fairly orderly which suggests that this could be the start of a trend rather than a crash that bounces back swiftly and data now coming out of the US and other jurisdictions would also indicate that there are tougher times ahead. Once again, investors will be back to data watching and top of the list is inflation, until we start to see significant progress there then it does feel like we will be in a ‘sell the rallies’ market.

Busy Day Ahead for Traders

Risk sentiment is most certainly to the left-hand side at the moment and traders are expecting more of the same in the trading day ahead. Investor focus will move to Australia early in the Asian session today as the latest CPI data is released – the expectation is for a higher 5.2% print after last month’s lower 4.9% result. There is little of interest on the calendar in the London session today but once New York opens then the focus is once again on the world’s biggest economy with Durable Goods data due out and Oil traders will be paying close attention to the US crude oil inventories again, especially with Oil trading still at elevated levels.