Markets Retreated Tracking a Global Selloff Amid Range of Catalysts

  • Market Overview

Wall Street traded lower on Thursday following a mixed bag of corporate earnings and a selloff in high-growth and technology stocks amid rising Treasury yields. Markets in Europe also ended the day in negative territory tracking global risk-off sentiment. Germany’s DAX was the only major index that bucked the trend in Europe, yielding a 0.20% gain supported by automation giant, Siemens (ETR: SIEGn ), which reported positive fourth-quarter corporate earnings. In economic news, the annual inflation rate in the Eurozone continued to break record highs, jumping to 10.60% y/y in October 2022 from 9.90% in the month prior.

Chinese stocks slipped on Thursday as a flare-up in domestic Covid-19 cases spurred concerns over more lockdowns. At the same time, weakness in other Asian markets also weighed on sentiment as market participants re-assessed the trajectory of US monetary policy. More than 20 thousand new daily cases have been reported in mainland China in recent days since the country eased some stringent anti-virus rules. Sentiment was also dampened by reports that Chinese government advisers are set to propose a low economic growth target range of between 4.50% to 5.50% for 2023 at an annual policymakers' meeting. Meanwhile, the People's Bank of China has warned that inflation in the country may rise as demand stabilises. Back home, the FTSE/JSE All Share Index (ALSI) also retreated for the second session yesterday, indicating global risk aversion following more hawkish commentary from Federal Reserve (Fed) officials. The rand continued to weaken against the USD, trading at R17.36 at 22h30.

Brent crude fell to around $90 a barrel while gold was also in the red trading around $1 760 an ounce pulled down by low demand. This follows hawkish Fed messaging which suggested more rate hikes than markets anticipated, dashing hopes of a policy pivot.

PSG Wealth Daily Investment Update, 18 November 2022

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