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.
, 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
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
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.
Source: ThinkMarkets and TradingView.com