Stocks Remain Under Pressure

US500, Daily

US equity futures are sharply lower again with the NASDAQ plunging -2%, while the S&P 500 is off -1.38% and the Dow off -0.72% after the late swing higher Monday.  Treasuries are also weaker, however, failing to glean a haven bounce. The front end is underperforming as the FOMC kicks off its meeting today and is expected to cautiously tee up a rate hike in March.

However, Singapore central bank’s surprise tightening was a hawkish reminder of the risks. This was the first time in 7 years the bank has acted outside of a scheduled policy meeting. The 2-year Treasury yield is 1.6 bps cheaper at 1.021%. The 5-year is 1 bp higher at 1.570%. The 10-year is up 0.4 bps at 1.774%.

European bourses are firmer however, piggybacking off of the hefty rebound on Wall Street yesterday and following better than expected German Ifo data and steady UK CBI numbers. EGB rates are higher, paced by the 4 bp jump in the Gilt to 1.166%, while the Bund is 2 bps higher at -0.092%. Asian markets plunged and closed with hefty losses amid geopolitical risks, Omicron, and Fed fears. The CSI tumbled -2.26%, with the ASX down -2.49% and the Nikkei off -1.66%. Australia was especially hit after inflation surprised on the upside and the tightening from Singapore. Asian bonds closed with losses.

In the US today, Earnings will be a focal point as the poor guidance from Netflix is still stinging. Data includes Consumer Confidence and the Richmond Fed Manufacturing Index. (15:00 GMT).

Technically, key levels have been breached in the Equity sell-off, with the US500 touching lows yesterday not seen since June 23 last year. The vital 200-day moving average now sits as a key resistance level at 4,432, above here is the 61.8 Fibonacci level at 4,470 and the 50.0 fib level and 20-day moving average around the 4,500 zone. Support is the psychological 4,300, the October 2021 low at 4,260 and the 161.8 Fib extension at 3,915.

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Stuart Cowell

Head Market Analyst

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