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Daily summary: Global stocks slide as recession fears drag on

  • European indexes finished today's session lower as renewed recession fears dented risk sentiment. Dax fell 1.73% and CAC40 ended 0.90% lower, weighed down mostly by real estate stocks, auto makers, and industrials. On economic data, 
  • Germany’s inflation fell to 7.6% in June, slowing from an all-time high of 7.9% in May, while inflation in Spain, jumped to 10.2%, a highest level since1985.

  • Bank of England Governor Bailey said during the ECB event that the British monetary authority would not need to act forcefully to bring down inflation, contrasting with comments from Fed Chair Jerome Powell, but reiterated that the UK economy was beginning to slow.

  • Powell reiterated Fed's commitment to do-whatever-it-takes to control high inflation and said the bigger risk is to fail to restore price stability. The US economy is in a good shape and well positioned to withstand tighter monetary policy although there is a risk it will slow more than needed. He also confirmed the Fed is raising rates expeditiously and aims to move into restrictive territory fairly quickly.

  • US indices erased early gains following Powell’s comments. Dow Jones trades slightly below the flat line, while S&P 500 and Nasdaq fell 0.50% and 0.60% respectively.

  • US Q1 GDP contraction was revised higher to an annualized 1.6%, from 1.5% drop in the second estimate. 

  • CHF and USD are the best performing major currencies, while EUR and GBP lag the most. 

  • We could observe increased volatility on the crude oil market. At the beginning of the session, prices rose sharply as OPEC did not make any decisions regarding production limits. Most likely, OPEC is waiting for the outcome of the meeting between Biden and leaders of Saudi Arabia.

  • US reports that it is talking to Arab nations about increasing production and is taking into consideration release of additional strategic reserves after October. Currently, strategic reserves have dropped below 500 million barrels.

  • Oil inventories, according to the DOE report, fell for the second week in a row (last week's report was released only today). The data showed, however, a significant buildup of petroleum products.

  • US refineries are currently operating at maximum capacity, while inventories in Cushing have dropped to an extremely low, dangerous level.

  • Gold failed to break above $1835 level and pulled back to $1816 while silver trades at $20.74.

  • Similar to stocks, cryptocurrencies also moved lower. Bitcoin again trades below psychological $20.000 level, while Ethereum price dropped to $1090.

OIL.WTI prices bounced off major resistance at $113.30 which is marked with previous price reactions, 23.6% Fibonacci retracement of the last upward wave and two SMAs. Nearest support to watch is located around $109.25.Source: xStation5

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