Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View More
Nasdaq 100 Sinks as Risk-Off Sentiment Dominates Markets, Commodities Slump

Nasdaq 100 Sinks as Risk-Off Sentiment Dominates Markets, Commodities Slump

Diego Colman,

KEY MARKET DEVELOPMENTS:

  • U.S. stocks slump on risk-off sentiment, Nasdaq 100 falls as much as 2%
  • Growth-linked commodities, such as oil and copper, also take a beating amid growing recession fears
  • U.S. dollar rallies across the board, EUR/USD briefly breaks below parity

Trade Smarter - Sign up for the DailyFX Newsletter

Receive timely and compelling market commentary from the DailyFX team

Subscribe to Newsletter

Most Read: US Dollar Price Action Setups: EUR/USD, GBP/USD, USD/CAD, USD/JPY

Risk-off sentiment is dominating price action on Thursday. Investors are growing increasingly fearful that the U.S. economy is headed for a hard landing amid tightening financial conditions. Disappointing corporate earnings and poor profit guidance from major U.S. banks such as JPMorgan Chase and Morgan Stanley are exacerbating the negative tone, but the bad news doesn't end there. Expectations that the Fed will raise interest rates by 100 basis points at its July meeting, following June's disastrous inflation report, are making matters worse for risky assets.

Against this backdrop, U.S. stocks are sharply lower in the late morning trade, with the Nasdaq 100 off by about 2%. Growth-linked commodities are also taking a beating on concerns that a significant slowdown will dampen demand for raw materials, putting downward pressure on their prices in the coming quarters. In this context, copper and oil prices are plunging more than 3% at the time of writing, extending their sell-off that began last month.

USD Forecast
USD Forecast
Recommended by Diego Colman
Get Your Free USD Forecast
Get My Guide

Meanwhile, the U.S. dollar is rallying across the board on the flight-to-safety move witnessed across markets, with the DXY index up about 0.9% to 109,00, its highest level since September 2022. With traders aggressively dumping high-beta currencies, the EUR/USD briefly broke below parity, falling as low as 0.9952 before stabilizing around the 1.0000 handle.

Looking ahead, recession angst is not likely to abate any time soon; in fact, the state of anxiety may increase in the coming days when U.S. companies release their financial statements during the current reporting period. Quarterly results and forward-looking commentary could continue to underwhelm expectations, reinforcing the notion that the U.S. economy is headed for trouble. In this environment, risk assets may struggle, while the US dollar may reign supreme, especially if volatility levels pick up.

Equities Forecast
Equities Forecast
Recommended by Diego Colman
Get Your Free Equities Forecast
Get My Guide

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES