The current theme in markets is to buy the dollar, sell everything else. The early reprieve yesterday was conceded as bonds turned and that helped to signal a turnaround in broader market sentiment as well. As much as investors would like to remain hopeful, it's tough to pick a reversal point for stocks especially when the fundamental backdrop remains as it is.
The flurry of positive US data yesterday isn't helping as it only strengthens the case for the Fed to stay on the tightening path. And when they are the only major central bank not wavering when all others are flailing, it's an unsettling feeling for risk trades - especially in a time when the bond market is also threatening financial dislocations, not just in the UK but Treasuries as well.
Adding to the woes for equities this week is that we are seeing signs of cracking in the technical picture. The S&P 500 is threatening the June lows now with a potential look towards its 200-week moving average (blue line) next:
The Nasdaq is also in a similar predicament but already breaching below its own 200-week moving average while the Dow has slipped to its lowest levels since November 2020 after a run of six straight days of losses.
It's not just Wall Street by the way. The DAX is also threatening a steeper decline as it broke below the March and July lows, now even slipping past the 50.0 Fib retracement level support from the swing higher during the pandemic recovery:
