The recent US interest rate hike and the Russia-Ukraine war have continued to impact some global stock markets since the start of the week.
The Standard and Poor’s 500 (S&P500) was down 3.20 per cent and the Nasdaq (Nas100) 4.29 per cent, while the Dow Jones Industrial Average (DJIA) dipped 1.99 per cent.
This comes on the heels of the Federal Reserve’s May 4 announcement to raise interest rates by half a percentage point to a range of 0.75 per cent to one per cent to tackle rising inflation.
Interest rates are also expected to rise further to keep pace with inflation.
The rate hike has also pushed the dollar index higher – trading at 103.6 after rising to a 20-year high of 104.19.
Yields on US Treasury bonds rose more than expected, due to the tightening of the Federal Reserve’s monetary policy, and then slowed slightly after Atlanta Federal Reserve Chairman Raphael Bostic rejected the expectation of a 0.75 per cent rate hike at a central bank meeting.
The Chicago Board Options Exchange’s CBOE Volatility Index (VIX) – also known as the “fear index” or “fear gauge” – is trading at 34.75, indicating that the market is still in trouble.
For this week’s trading recommendation, stock investors should sell the Nas100 at 12670.00, setting up a stop-loss function at 12900.00 and a take-profit at 12100.00.