The Insider and Market Summary:
Widespread Sell-Off, Wall Street Closes Sharply Lower
Consumer Confidence Index Drops, Lowest Since 2021.
The latest economic data shows that the US consumer confidence index compiled by the Conference Board fell to the lowest level since February 2021, falling to 98.7 in June from 103.2 in May. The initial expectation is 100. The inflation expectation index according to CB rose to 8% from 7.5%. Short-term expectations reached the most pessimistic level. There is an enlarged gap between the “current situation” and “expectations” to a level that is often said to be the beginning of a recession. In other economic news, the U.S. National House Price index according to Case-Shiller rose 2.1% in April, after rising 2.6% in March, suggesting a slowdown was occurring. This figure is slightly better than the initial estimate of an increase of 2%.
Widespread Sell-Off, Wall Street Closes Sharply Lower.
Wall Street closed sharply weaker by a widespread sell-off following the release of consumer confidence index data. The numbers are so dire that they dampen market participants’ confidence and fuel concerns about a recession ahead of the arrival of the issuer earnings season. The S&P and Nasdaq indexes fell about 2% and 3%, respectively, with Apple Inc, Microsoft Corp and Amazon.com among the major declines. The Dow Jones slumped 1.6%, or 491.27 points, to 30,946.99, the S&P 500 fell 78.56 points, or 2.01%, to 3,821.55 and the Nasdaq fell 343.01 points, or 2.98%, to 11,181.54. This sell-off is believed to be disappearing but it is unlikely to happening in the short term.
Lagarde Does Not Provide Clarity on ECB Policy Prospects, Euro Weakens and US Dollar Strengthens.
The U.S. dollar rose as the euro faltered after ECB President Christine Lagarde offered no new insight into the central bank’s policy outlook. The ECB is widely expected to follow its global counterparts by raising interest rates in July to try to control soaring inflation despite economists being divided over the magnitude of rate hikes. The euro held below $1.06 after Lagarde said the central bank would move gradually but with the option to act decisively on any mid-term inflation cuts, especially if there were signs of falling inflation expectations. The euro was last down 0.6% to $1,052. The dollar index (DXY), up 0.51% at 104,490.
Market Focus Today :
The three main Central Bank Governors are scheduled to give statements, namely Jerome Powell, Andrew Bailey and Christine Lagarde. The market will look forward to a number of statements regarding the monetary policy outlook of each central bank. US oil supply data is scheduled to be released which is expected to experience a sharp decline, from a surplus of 2 million to minus 1.6 million barrels. Oil price movements will also be sensitive to the outcome of the OPEC meeting scheduled for today. Other economic data expected to have an effect on currency trade are the initial CPI figures from Germany and the Japanese consumer confidence index.