In the latest market recap, Wall Street experienced further de-risking as there was a lack of positive catalysts. Elevated Treasury yields, higher oil prices, and a gridlock in the US government funding bill were identified as prevailing risks for the market. The VIX, a measure of market volatility, reached its highest level since May 2023, reflecting risk-off sentiment. Additionally, the US dollar continued to rise, supported by slightly hawkish Fedspeak.
On the data front, US new home sales and consumer confidence both showed downside surprises, indicating moderating growth conditions. However, it’s important to note that there is still no clear evidence of a recession. The Nasdaq 100 index faced a break below an ascending channel pattern, reaching a new three-month low. The next line of support stands at the 14,200 level, which is crucial for maintaining the broader upward trend.
In the Asian market, stocks are expected to continue their downward trend. The Hang Seng Index hit a nine-month low due to increasing risks of a potential liquidation of China Evergrande. China’s August industrial profits registered a softer decline, but risks in the property sector still linger. Australia’s Consumer Price Index (CPI) data met expectations at 5.2%, leaving rate expectations well-anchored for further rate holds from the Reserve Bank of Australia (RBA). The AUD/USD pair has been rangebound, with sellers remaining in control.
In terms of silver prices, attempts to bounce off an upward trendline support were short-lived. Higher bond yields and a stronger US dollar limited positive follow-through from buyers. A retest of the upward trendline support around the US$22.60 level is expected. A breakdown of the US$22.20 level may provide greater conviction for sellers, potentially leading to a retest of the US$20.60 level. On the upside, the US$23.75 level serves as immediate resistance.
Overall, market conditions remain uncertain with various risks and challenges. Investors are closely monitoring economic data and geopolitical developments to assess their impact on the markets.
