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Stay ahead of the game with today’s market insights brought to you by the expert team at vtmarkets.com.
US stocks declined lower on Thursday, failing to find many reasons to climb higher and extending its previous slide amid higher bond yields, hawkish Fedspeak, and a surge in equity bullishness. The fresh fears surrounding the economic slowdown ahead of the key US data lend support to the greenback’s gauge versus the six major currencies and weighed on the equity markets.
However, the downbeat comments from the Federal Reserve (Fed) officials and softer US data, as well as China-inspired market optimism in the Asia-Pacific zone, might help the stock market to find recovery strength. On top of that, Japan’s Prime Minister Kishida is expected to name BOJ Governor Kuroda’s successor next week. Speculation revolves around whether Kishida will choose a more aggressive leader for the central bank that will end the ultra-loose monetary policy. On the Eurozone front, the odds of a continuation of bumper interest rate hikes by the ECB are still solid despite a decline in German inflation.
The benchmarks, S&P 500 and Dow Jones Industrial Average both declined lower on Thursday as the S&P 500 wiped out a rally of almost 1% amid renewed recession fears and the cautious mood. The S&P 500 was down 0.9% daily and the Dow Jones Industrial Average also dropped slightly with a 0.7% loss for the day. All eleven sectors in S&P 500 stayed in negative territory as the Communication Services sector and the utility sector are the worst performing among all groups, losing 2.80% and 1.41%, respectively. The Nasdaq 100 meanwhile retreated the most with a 0.9% loss on Thursday and the MSCI World index was down 0.4% for the day.
Main Pairs Movement
The US dollar retreated lower on Thursday, dropping to a daily low below 102.70 level but then rebounded back amid the fresh fears surrounding the economic slowdown ahead of the key US data. The higher government bond yields and comments from Richmond Fed President Thomas Barkin help the greenback to find demand, as he said that the effects of the Fed’s policy tightening have been substantial while adding that macroeconomic data put back the risk of a recession.
GBP/USD advanced higher on Thursday with a 0.41% gain after the cable preserved its upside traction and touched a daily high above the 1.2180 mark ahead of UK GDP data. On the UK front, the UK GDP is expected to release on Friday and upbeat data could avoid recession fears and support the Pound Sterling. Meanwhile, EUR/USD also witnessed buying interest and climbed to a daily high of around 1.0790 area. The pair was up almost 0.26% for the day.
Gold declined sharply with a 0.73% loss for the day after retreating from a daily top and extended its slide towards the $1860 area during the US trading session, as the higher US Treasury bond yields renewed recession fears and exerted bearish pressures on the yellow metal. Meanwhile, WTI Oil dropped lower with a 0.52% loss for the day. Oil prices dropped as Asia’s earthquake worries faded.
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Economic Data
| Currency | Data | Time (GMT + 8) | Forecast |
| GBP | GDP (QoQ) (Q4) | 15:00 | 0.0% |
| GBP | GDP (MoM) (Dec) | 15:00 | -0.3% |
| GBP | GDP (YoY) (Q4) | 15:00 | 0.4% |
| GBP | Manufacturing Production (MoM) (Dec) | 15:00 | -0.2% |
| GBP | Monthly GDP 3M/3M Change (Dec) | 15:00 | |
| EUR | EU Leaders Summit | 18:00 | |
| RUB | Interest Rate Decision (Feb) | 18:30 | 7.50% |
| CAD | Employment Change (Jan) | 21:30 | 15.0K |
