The S&P500 (-0.44%) came off from its record highs following the Federal Reserve’s (Fed) reluctance to offer more guidance immediately. The minutes of the FOMC’s last meeting proved to be slightly less dovish than previously as policymakers noted that ‘providing greater clarity regarding the likely path of the target range for the federal funds rate would be appropriate at some point’, but not ‘at upcoming meetings’.
With stalemate in fiscal talks and no sign of more monetary stimulus in horizon, investors probably felt alone on top of a mountain. The US dollar gained, and the treasury yields slipped.
Asian markets were moody as well. Stock markets in Sydney (-0.77%), Shanghai (-1.08%), Hong Kong (-2.05%) and Tokyo (-1.0%) followed up on the US session losses.
WTI crude retreated almost 1% to $42.50 per barrel as OPEC reckoned that the pace of the global recovery appeared to be slower than they anticipated, pointing at the growing risks of a prolonged wave of Covid-19, but didn’t say much about production cuts, other than calling the laggards to compensate for their overproduction over the past months. Meanwhile, the EIA data showed that the US oil inventories declined 1.9 million barrels last week, less than penciled in by analyst. Worries of an increasingly swamped oil market due to solid supply and weakening demand prospects should keep the selling pressure tight near and above the actual levels. Inability to clear the $43 resistance should encourage a downside correction toward the $40 mark.
Activity on FTSE (-1.19%) and DAX futures (-1.33%) hint that the European equities are preparing for a dive on Thursday as a result of a global loss of risk appetite.
Oil and mining stocks will likely feel the pinch of global growth worries and softer oil and commodity prices.
By Ipek Ozkardeskaya
