Friday Close and Weekend Wrap: 4 November 2022

Friday Close and Weekend Wrap: 4 November 2022

Key Points:

  • Stocks Sink as Hawkish Bets Revive Recession Fears
  • Treasury yield-curve inversion reaches a four-decade extreme
  • Pound tumbles as BOE tells investors to rein in hike wagers

Stocks sank before Friday’s jobs data amid concern that a deeper recession could be in store with the Federal Reserve expected to hold rates at a higher level for longer to tame inflation.

The S&P 500 saw its fourth straight decline, dragged down by big tech as Treasury yields climbed. Apple Inc. tumbled over 4% and Inc. suffered its longest slide since 2019. A key segment of the Treasury curve reached new extremes of inversion, touching a level not seen since the 1980s when the Fed was aggressively tightening. Curve inversions have a track record of preceding economic downturns.

Swaps that reference future Fed meetings indicate an expected peak rate above 5.1% around mid-2023. Estimates briefly dropped below 5% on Wednesday. The benchmark rate currently sits in a range of 3.75% to 4%.

Markets are rightly more concerned with the ultimate level of rates rather than the pace of tightening, according to Mark Haefele, chief investment officer at UBS Global Wealth Management — who doesn’t believe the conditions are in place for a sustained stock rally.

“The Fed, along with other major central banks, looks likely to keep tightening rates until the first quarter of 2023,” Haefele noted. “Economic growth will likely continue to slow into the start of the new year, and global financial markets are vulnerable to stress while monetary policy continues to tighten. Such headwinds have yet to be fully reflected in earnings estimates or equity valuations.”

The pound slumped as the Bank of England told investors to rein in expectations for hikes.

European Central Bank President Christine Lagarde warned that a “mild recession” is possible, but that it wouldn’t be sufficient in itself to stem soaring prices. The comments are part of a raft of public appearances by ECB officials, as investors and analysts ponder the twin challenges of record price growth and a likely economic downturn, due largely to Russia’s invasion of Ukraine.

Trade the global markets with a broker that has integrity, honesty and transparency at its core


Market Wrap: 24 August 2023

Stocks Rally on Tech Optimism, Fed Rate Outlook:  Lackluster US, Europe economic data opens door for rate pause Nvidia’s bullish sales outlook prompts after-hours stock

Read More »

Market Wrap: 15 August 2023

Yuan Falls on PBOC Rate Cuts; Asian Stocks Mixed:  Japan’s economy shows resilience as growth beats estimates Economic woes mount in China as post-pandemic recovery

Read More »

Market Wrap: 11 August 2023

China Tech Pulls Asian Stocks Lower; Dollar Steady:  US core CPI posts smallest back-to-back increases in two years Daly says Fed has ‘more work to

Read More »

Market Wrap: 31 July 2023

Asian Stocks Echo US Rally on Soft Landing Hopes:  Yen declines after unscheduled Bank of Japan bond buying China manufacturing PMI data shows contraction in

Read More »

Market Wrap: 27 July 2023

Stocks Rise, Dollar Slips as Rates Peak in Sight:  ECB will raise rates by another quarter-point, survey shows US data Thursday include GDP, initial jobless

Read More »

This website is owned and operated by the Ox Securities group of companies, which include:
Ox Securities Pty Ltd registered address Level 37, 1 Macquarie Place, Sydney NSW 2000 Australia. AFSL 438402 ACN 163 551 602
Ox Securities Limited (SV) registered address Suite 305, Griffith Corporate Centre, Beachmont, Kingstown, St Vincent and the Grenadines
Risk Warning: The information contained on this website is general in nature and does not constitute advice or a recommendation to act upon the information or an offer. The information on this website does not take into account your personal objectives, circumstances, financial situations or needs. You are strongly recommended to seek independent professional advice before opening an account with us and/or acquiring our services/products. Ox Securities Limited (SV) do not accept applications from residents of the United States of America and Australia
Before you decide whether or not to invest any products referred to on this website, being over the counter (OTC) derivatives, it is important for you to read and consider our Financial Services Guide (FSG), Product Disclosure Statement (PDS), and Terms and Conditions (T&C), and ensure that you fully understand the risks involved. Fees, charges and commissions apply. OTC derivatives, including margin foreign exchange contracts and contract for differences, are leveraged products that carry a high level of risk to your capital. Trading is not suitable for everyone. You may incur losses that are substantially greater than your initial investment. You do not own, or have any rights to, the underlying assets which the OTC derivative is referring to. You should only trade with money you can afford to lose. There are also risks associated with online trading including, but not limited to, hardware and/or software failures, and disruptions to communication systems and internet connectivity.

Copyright © OxSecurities 2020. All rights reserved