Global stocks declined during this morning’s European Cash Market Open, the Asian session, and yesterday’s trading. One of the stocks to experience the most significant declines was the European Luxury Stock category which saw $25 billion lost within a single trading day. However, Asian equities such as the Hang Seng 50 also declined by 1.75% this morning. In addition, the NASDAQ is falling a further 0.75% this morning, on top of yesterday’s 0.83% decline. Why is the global stock market seeing a short-term collapse and will it continue?
The stock market continues to experience a strong correlation with the US Dollar. This is primarily due to the connection between the market’s risk appetite and investment decisions. Due to the “risk off” appetite within the market, the US Dollar has benefited as equities are declining. This morning the US Dollar Index is trading at 104.96 which is 0.10% higher than the open price. The Dollar is now trading at its highest level since March 2023. The British Pound is the worst-performing currency of the past 24 hours, including this morning’s session.
NASDAQ - Global Stocks Sink
The NASDAQ was the worth-performing US-based index, declining by 0.13% before the US open and a further 0.64% during the US trading session. Whereas, the Dow Jones fell by 0.57% and the SNP500 by 0.70%. However, it should be noted that the NASDAQ continues declining during this morning’s futures market and has formed a further bearish impulse wave. As the index continues to create an “Elliot wave” style downward trend, the index continues to obtain “sell” signals from technical analysis and the order flow book.
Traders should also note that the Asian market is experiencing a strong decline, and EU competitors are witnessing mixed price movement. The question is if investors will purchase the discounted price, how the asset has fallen to its lowest price since last Tuesday. The asset has retraced to the previous breakout point, which can act as a support level, making it possible. However, bullish momentum will need to be witnessed for potential buy signals. So far, the index is not yet indicated as oversold on the Relative Strength Index.
When looking at the NASDAQ’s most influential components, from the most significant ten stocks, none managed to hold onto their value. From the top ten stocks, Apple saw the largest decline falling 3.58% followed by NVIDIA falling 3.05%. Investors will continue to monitor individually the performance of the top twenty most influential stocks. One of the main concerns for investors is the price of commodities which continued to rise to a new high on Wednesday. The Federal Reserve will likely consider another interest rate hike if commodity prices remain high. A further rate hike, during the current static economic condition can potentially trigger a larger downward dive.
GBP/USD - Investors Turn to the Upcoming FOMC Speech
The GBP/USD exchange rate is experiencing one of the most significant declines during this morning’s session. Both currencies influence the price action as the US Dollar has been strengthening while the Pound depreciates against the whole currency market. If the Pound declines below 1.24662, further sell signals can potentially arise.
Yesterday's published data on S&P Global Construction PMI in the UK: the index decreased last month from 51.7 points to 50.8 points, which was very close to market forecasts of 50.7 points. Analysts note that in August, the number of orders for companies in the sector fell sharply as the tightening of monetary policy by the Bank of England put pressure on demand.
The latest ISM Services PMI has supported the US Dollar, on the other hand. The Services PMI read 54.5, which is higher than the previous five months and higher than previous expectations. This afternoon, investors will focus on the Weekly Unemployment Claims and the FOMC speeches regarding the future interest rate path. The Dollar may experience further bullish price movement if the Unemployment Claims read lower and Mr. Harker from the FOMC points to more hikes.
Summary:
- Global stocks decline due to the market’s low-risk appetite and fears higher commodity prices will prompt higher inflation.
- This morning, the US Dollar Index is trading at 104.96, which is 0.10% higher than the open price.
- The British Pound, including this morning's session, is the worst-performing currency of the past 24 hours.
- The latest ISM Services PMI has supported the US Dollar, on the other hand. The Services PMI read 54.5, which is higher than the previous five months and higher than previous expectations.
- When looking at the NASDAQ’s most influential components, from the most significant ten stocks, none managed to hold onto their value. Of the top ten stocks, Apple saw the largest decline, falling 3.58%, and NVIDIA fell 3.05%.
