The downward trend intensified on Thursday, after a short time recovery on Wednesday, as the risk of economic recession becomes global. Recent increasing risk in UK financial markets can spread to other markets as BOE’s decision on Wednesday to buy long-dated government securities to stabilize the turmoil in the markets, only had a short-term effect. On the other hand, today’s US economic data again increased the possibility of stricter policies, raising the fear of a global economic downturn.
Stocks’ free fall, all across the globe!
stock indexes slipped on Thursday after these data and news. the S&P 500 lost 2.2% so far, increasing its overall loss in 2022 to more than $9.1 trillion in market value. Nasdaq composite fell over 3.2% due to losses in mega-cap growth names such as Amazon, Apple, Microsoft, Meta, and Tesla. And Dow Jones Industrial Average was down 500 points, or 1.68%. So far in 2022, the S&P index recorded no new 52-week highs and 58 new lows, while the Nasdaq recorded three new highs and 242 new lows.
In Europe, conditions were even worse. By getting closer to winter and the beginning of the cold season, economic problems can get even worse in Europe. In Germany, which is the largest European economy, analysts now expect much weaker growth to 1.4% from the earlier estimates of 2.7% in 2022. Still, for next year, it should contract by 0.4%, which can be the most optimistic outlook.
In line with this optimistic outlook, other analysts expect German GDP to shrink by 7.9% in 2023 and by 4.2% in 2024, if they cannot solve the gas shortages, which is so likely, especially with recent explosions in Nord stream1. For now, the gas shortage still increasing the recession risks and higher inflation.
German DAX futures are at 11,959 losing 1.7% today and technically also confirms that bears still controlling the market. 11,500 and 10.800 are the next support levels for DE30 and seem likely to be touched soon.