IMF and the world bank meeting with some other financial institutes from around the globe started today, October 10, and will continue for the next six days. On the first day, a comment from World Bank’s Malpass, and IMF’s Georgieva increased the market risk level to put more pressure on the stock markets, as they emphasized that inflation threats after Russia’s invasion of Ukraine increased and now can stay much longer, to growth chance of global recession.
Global recession now looks more real!
Several factors now threaten the global economy, including the COVID-19 pandemic, Inflation, Central banks’ policies, the Russia-Ukraine war, the possibility of spreading conflicts to other countries, climate disasters, and trade tensions. These fears affected in IMF World Economic Outlook, as it downgraded its forecast for 2.9% global growth in 2023.
Europe is the biggest victim of the Russia-Ukraine war, while in China housing volatility and COVID-19 disruptions are dragging down growth. Central bank policy is the main threat in the United States, as inflation is still high, and data says that the labor market can handle more tightening policies.
Last Friday, US nonfarm payrolls rose by 263,000 in September, even though it was the smallest gain since April last year and less than 315,000 in August number, still was much better than 250K market estimates. These hiring numbers reduced the unemployment rate to 3.5% from 3.7% in August.
On the other hand, the average weekly hours worked remained unchanged at 34.5, compared with August, with the monthly rate of average hourly wages also unchanged at 0.3%, while the annual rate slightly fell to 5.0% (previously 5.1%), which is still at a relatively high level.
According to the Bureau of Labor Statistics data, the leisure and hospitality industries performed the best, recording 83,000 newly created jobs; the healthcare industry had 60,000 new jobs; professional and business services hired 46,000 employees; manufacturing employment recruitment was 22,000; Jobs in the construction industry increased by 19,000; in the wholesale trade increased by 11,000; and finally, in the financial, transportation and warehousing industries all recorded a decrease of 8,000.
The published data show that the US economy is healthy, so Fed will even be more determined to adopt aggressive monetary policies. According to the Fed Watch tool, the possibility of interest rates rising by 75 basis points in November, rose to 81.1%.
As a reaction to these data and news, stock markets continued their overall downtrend. Nasdaq future at the current price is losing about 1.6% today and technically moving under 20 DMA, which is a very important level. As long as ND100 is trading under 11,500, bears will have more power to lead the market.