Risk sentiment cooled again yesterday as traders remained in loss control mode. A day after Powell poured cold water on the prospect of rate cuts this year, Treasury prices rebounded, while the S&P 500 fell for four consecutive days, its longest losing streak since January. No one was spared in this decline, and fear is replacing FOMO, with gold, crude oil and crypto prices all at a disadvantage.
On the political front, the United States is preparing to raise tariffs on Chinese steel imports and impose a number of other new restrictions, while the TikTok bill has also made significant progress in Congress.
Prices may be driven purely by technicals and positioning at this point, with the recent decline having already inflicted significant technical damage as seen by various sentiment indicators, though there is also a chance for an oversold bounce. The number of Nasdaq and SPX stocks hitting one-month lows has reached a nearly one-year high, with Citi’s proprietary sentiment barometer turning to “fear” territory after the recent decline.
In terms of corporate earnings, it was a mediocre start, with mixed earnings from banks (JPM missed expectations, Goldman Sachs beat), while LVMH sales missed expectations due to sluggish luxury purchases in China. In tech, Dutch giant ASML saw orders fall 61% to €3.6 billion in the first quarter, well below expectations of €4.6 billion, while TSMC and Samsung saw a slowdown in new orders due to higher inventory levels as global semiconductor manufacturing capacity increases.
On the crypto front, not much news of note, though the Ark ETF saw outflows for the second day in a row, with $42 million, while Grayscale also saw outflows of $133 million, while Blackrock’s IBIT saw only $18 million inflows, bringing the overall net outflows to over $160 million. Expect more sideways/downside price action in the short term…
