After two months of growth, US Stock markets dropped for a fourth straight session on Tuesday. Oil also fell sharply and, with Brent futures at $79 a barrel, is back where it began the year. In addition, China posted far weaker-than-expected trade data, and none had a good recovery prospect in the last month of the year!
Stocks across the globe are losing for the fourth straight session.
With weaker data recently, we can now see that recession fears have prevailed over other market drivers. Most investors ignore the inflation peak signals and decide primarily based on economic data. Market participants worry that weaker demand in 2023 will hurt company earnings, which means fewer manufacturing activities.
Unlike previous days, today’s Eurozone GDP was revised slightly higher, and German industrial production fell less than estimated. German factory orders also advanced 0.8% in October, well above an anticipated rise of 0.1%. However, On Tuesday, the European service PMI of 48.5 in November performed worse than 48.6 expected. Germany and France’s Service PMI also missed the estimates at 46.1 (down from 46.5) and 49.3 (down from 51.3). In line with slower retail sales, these weaker-than-expected data increased the fears of recession and pressures on the global stock markets.
After publishing mentioned data, German Economy Minister Robert Habeck said: “In addition to the slightly improved sentiment indicators, this is a further indication that the recession could be weaker than feared, even if the outlook for the industrial economy remains subdued.” However, investors ignored his comments and had adverse reactions.
Unlike European data, US PMI data were better than expected, but with missing trade data in China, fears returned. Exports and Imports in China fell by 8.7% and 10.6%, respectively.
From the technical point of view, we see this change in the market sentiment. As is shown in the below Daily chart of the Dow Jones Industrial Average, we can see the breakdown of a short-term bullish trend and support around 34,000. The downtrend technically ended, but bulls still need more reason to be trusted.