August 02, 2024 at 05:31AM
The heavy selloff came quite suddenly in US trading yesterday and that is carrying over to sentiment today as well. In Asia, Japanese stocks are facing a rout with the Nikkei down 4.5% and Topix down 4.7% currently. As Eamonn said, absolute carnage. The Hang Seng index is also down 2% at the break as the selling pressure remains overall.
Looking to US futures, tech shares continue to be the main drag after the plunge yesterday. S&P 500 futures are down 0.7%, Nasdaq futures down 1.2%, and Dow futures down 0.4% currently. In the bond market, 10-year Treasury yields have also sank below 4% as bids continue to flow through. The pattern of lower highs, lower lows is still playing out:
That is keeping some mixed flows in the likes of the dollar and gold, especially after the dovish message from the Fed and Powell on Wednesday. Then again, traders have already priced all of that in so is all of this just price action running up against a temporary wall? Or are markets really concerned about a worse outlook to the economy?
In trying to make sense of that, the US jobs report later will be one to add to the mix. If anything else, it might act as a bit of a litmus paper in figuring out what market players are focusing on.
In the meantime, it looks like caution will continue to prevail as we get to European trading today.
This article was written by Justin Low at www.forexlive.com.
