UK retail sales and US recession fears
S&P500=> The index falls from 4000
JD.com =>The stock has fallen 20% this year
GBP/CAD=> The pair rises to a 5-month high
S&P500 struggles on recession risks
US stocks ended yesterday modestly lower after a late bout of buying heading into the close, and futures are flat in early trade. The market mood remains cautious after Federal Reserve officials called for more rate hikes, raising fears of recession. St Louis Fed President James Bullard suggested that the terminal fed rate should be a minimum of 5.25% to slow economic activity sufficiently to rein in inflation. Data and retail earnings this week have broadly shown resilience, except for the housing market. Rising interest rates are starting to hurt demand. Housing starts fell again in October. Existing home sales are forecast to fall again in what is set to be the most prolonged decline in 15 years.
| US home sales | Expected: -0.1% (1.4%) | Previous: -1.5% |
Where might the S&P500 price head to?
S&P500 trades above its multi-week rising trend line, and the RSI is also over 50 in bullish territory. The price trades caught between its 100 and 200 sma. Buyers could look for a rise above the 200 sma at 4050 to expose the multi-month falling trendline at 4115. Sellers could look for a fall below 3900 the 100 sma to extend the selloff to 3850, the rising trendline support.
JD.com Q3 earnings preview.
JD.com surged yesterday following Alibaba’s better-than-expected earnings. Today it’s JD.com’s turn to post Q3 results before the US market opens. JD.com and other tech stocks have been struggling in the face of macroeconomic headwinds, including regulatory scrutiny, delisting threats, and slowing economic growth owing to a strict zero-Covid policy. However, growth is still expected due to disciplined spending and cost-cutting. Wall Street expects JD.com to report diluted earnings of $0.69 per ADS in Q3, up from $0.49 in the same period last year. Net revenue is expected to come in at $34.11 billion, in line with the previous year.
GBP/CAD rises ahead of retail sales.
GBP/CAD is rising as the pound continues its recovery from yesterday after falling following the fiscal statement. The Office of Budget Responsibility warned that the UK was already in recession and cut its GDP forecast for 2023 to -1.4% contraction from 1.8% growth. 2024 growth was also downwardly revised. The weaker growth outlook pulled on the pound. Today GBP is rebounding ahead of UK retail sales data which are expected to be weak as the consumer remains squeezed by 40-year high inflation and rising interest rates. Meanwhile, the loonie is losing ground tracking oil prices lower. Oil, Canada’s main export, fell to 80.70 per barrel, a 6-week low, as the oil demand outlook weakens on rising COVID cases in China and global recession fears. Canada industrial product price data is due.
| UK retail sales | Expected: 0% (1.5%) | Previous: -1.5% |
Support can be found at 1.5440 (50 sma) and 1.5180 (November low)
Resistance for the pair can be seen at 1.5930 (November high) and 1.6050 (June high).
