Fundamental analytics

Large-scale sale-off in equity markets

Yesterday negative market sentiment, which accumulated over several days, finally broke out and led to a large-scale decline in American stock markets. On Wednesday, US stock indices lost 3% -4%. It was a long time ago when such a large-scale decline shook the markets was; it was a February 2018. Strong sales pressed most  NASDDAQ high-tech index, which is always the most sensitive to economic growth and investment activity.

US dollar continued to decline, the dollar index fell to a two-week lows, this is the support zone of 94.85 points. It is interesting that there was no obvious reason for such strong decline. Of course, markets have been under pressure from negative sentiment since the beginning of the week. But what was the reason for the activation of the red button. The statements of IMF head K. Laggard can be noted. She said that the world economy is not very strong, and trade contradictions are not the best course of action, mentioned accumulated debt at ten-year highs, and developing countries risk of capital outflows in conditions of high yields on US bonds. The head of the IMF just voiced what is on everyone's mind. Let’s not forget the technical factors; in the conditions medium-term negative sentiment, the markets were at overbought levels. Earlier today, the markets played back large-scale sales in the United States. Asian markets lost 2% -6%, Korean, Chinese and New Zealand markets fell by more than 4%.

Today comes out the weekly most important statistics on the American economy. Markets will analyze data on consumer inflation in the United States. The main indicator for the Fed. If the data turns out to be stronger than expectations, this can again lead dollar yields  to growth and, as a result, pull up the US dollar along. Tomorrow there are data on China's trade balance. Statistics are expected to have a strong impact on commodity markets and commodity currencies. Statistics will help assess if the negative impact for Chinese economy is present due to US duties.

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