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Markets slump in mini taper tantrum

Fawad Razaqzada Fawad Razaqzada 18/06/2021
Markets slump in mini taper tantrum Markets slump in mini taper tantrum
Markets slump in mini taper tantrum Fawad Razaqzada
It is turning into a bit of a black Friday for risk assets in what looks like a mini taper tantrum.
 
Already lower on the day, stocks losses accelerated after the Fed's Bullard admitted that "it is natural we have tilted a little bit more hawkish." Investors fear that with inflation rising rapidly, QE might be tapered sooner than expected.  With the weekend approaching and given the lack of any bullish news flow, investors are not in any mood to buy this latest dip, this late in the day. So, it looks like we might end the day sharply lower, with index futures likely to gap lower at the Asian open on Monday.
 
Stocks, growth names in particular, have continued to sell-off, with the FTSE and DAX down nearly 2% on the day, with the losses for US indices being slightly lower – especially the Nasdaq.
 
The major currency pairs have also sold off, led by the NZD/USD, as well as commodity currencies such as the South African rand and Mexican peso. Gold and silver have given up most of their earlier gains. Bitcoin and other cryptos have not been immune to the selling either. The only exception has been crude oil, but with sentiment towards risk assets turning sour, I wouldn’t be surprised if oil prices follow suit later in the day or early next week. Read our week ahead preview HERE.
 
Dow breaks trend
 
With the indices selling off, several key support levels have broken, giving rise to technical selling. The Dow for example, has broken its bullish trend line this week, leading to follow-up selling today. The index was testing key support around 33300 at the time of writing. The bulls need to show up soon, or things might get really ugly soon.

dowSource: ThinkMarkets and TradingView.com
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.

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Fawad Razaqzada
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Fawad Razaqzada
Market Analyst, London

Fawad is an experienced analyst and economist having been involved in the financial markets since 2010, producing market commentary and research for a number of global FX, CFD and Spread Betting brokerage firms. He leverages years of market knowledge to provide retail and professional traders worldwide with succinct fundamental & technical analysis. Fawad also offers trading education to help shorten the learning curves of developing traders.
 
His colleagues consider him an expert at reading price action on the charts. This together with his deep understanding of economics and fundamental analysis, and trading experience, puts him in a great position to forecast short term price movements. Fawad covers a wide range of markets, including FX, commodities, stock indices and cryptocurrencies and his comments are regularly quoted by the leading financial publications such as Reuters and Market Watch. In addition to ThinkMarkets, Fawad also provides analysis and premium trade signals on his own website at TradingCandles.com.
 
 

Carl Capolingua
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Carl Capolingua
Market Analyst, Melbourne

Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions. Specialising in Australian and US stock markets in particular, Carl uses a top-down approach to assess the global macro picture before using both technical and fundamental techniques to select stocks. He regularly appears as an expert commentator on a number of media outlets throughout the Asia-Pacific region.
 
 
 

Kearabilwe
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Kearabilwe Nonyana
Market Analyst, South Africa

Kearabilwe is an experienced Sales trader and Analyst specialising in Equity and Equity derivatives. His career in the financial markets has seen him hold various positions in global investment banks and global CFD and Spread betting firms. He has deep interest in using quantitative methods to help him understand and teach the fundamental drivers of asset prices.
 
 
 

Fawad Razaqzada
Fawad Razaqzada
Fawad is an experienced analyst and economist having been involved in the financial markets since 2010, producing market commentary and research for a number of global FX, CFD and Spread Betting brokerage firms.
Carl Capolingua
Carl Capolingua
Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions.
Kearabilwe
Kearabilwe Nonyana
Kearabilwe is an experienced Sales trader and Analyst specialising in Equity and Equity derivatives.

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