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DowJones - Pressure Mounting
10.06.2022

The DowJones, one of the world’s leading indices declined during the latest trading session and continues to decline in this morning’s pre-market open. The price movement is being influenced by economic, political and sentimental factors.

The price movement of the DowJones mounted to a 1.98% decline in the latest trading session, and a further 0.45% decline before today’s US Session opened. In total, over the past 24 hours, it has measured a decline of 2.43%, putting the asset on a weekly decline of 2.16%.

Looking at the price movement of the asset it can be seen that the index has recently attempted to build up momentum to form a bullish trend and correct back upwards. However, the momentum was lost and the instrument fell into a sideways trend before breaking lower yesterday. Currently, the price is seeing lower price highs after each attempted gain in price, however, there has only been one successful lower “price low”, which is the latest price wave. This price wave has pushed the price below the moving average and volume weighted average price, indicating a weak price and sentiment.

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The pressure on the US stock market seems to be increased for two main reasons. The first is the expected increase in inflation, which, in turn, justifies the forecasts regarding the continuation of aggressive rate hikes by the US Federal Reserve. The market may also be stressed about the slowdown in the growth of the national economy, on top of the threat of a possible recession. Currently, this afternoon’s CPI data is expected to come in at +0.7%, indicating that the level of inflation is rising.

The second reason is the damp negative outlook on the economy given by the European banker and President of the ECB (European Central Bank), Ms Lagarde. According to Ms. Lagarde, the central regulator, believes that over the next 12 months, the economy is likely to witness high inflation with little economic growth. These are known to be the main two elements for a stagnated economy.

In the corporate segment, the American technology company Intel Corp. suspended the recruitment of new employees due to increased risks of economic uncertainty and even a potential recession towards the end of the year. This forced management to reconsider the capital investment plan and the functioning of the departments.

Growth in the domestic bond market continues to be a negative factor for the index. According to yesterday's auction report, 3-week and 8-week Treasury bills were placed at an increased rate of 1.040% and 1.150%, respectively, eliminating the possibility of a downward correction. On the other hand, the global 30-year Treasuries were placed at a rate of 3.185%, significantly higher than 2.997% on the previous placement. This may indicate that the market currently prefers safe and lower risk assets. Again this further pressures the equities market which can be deemed as medium to high risk.

The only stock to increase in value within the index was Home Depot which increased by 0.78%. All other stocks had declined with the largest declines seen with Boeing declining by -4.23%, Walt Disney by -3.76% and Apple by -3.60%. Other indices such as the SNP500 and NASDAQ had also declined during the latest trading sessions. The SNP500 declined by 2.38% and the NASDAQ by 2.74%.

The main driver in terms of economic events is likely to be the release of today’s CPI figure. Traders will be looking to see how the market reacts to the release.

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