- US equity markets were under pressure on Thursday, with all major US indices dropping more than 1.0%.
- Markets fell as Russia/Ukraine/NATO tensions continue to escalate against the backdrop of uncertainty about the timeline of Fed tightening.
- The S&P 500 fell 2.0% to back below 4400.
US equity markets were under pressure on Thursday, with all major US indices dropping more than 1.5% on the day as Russia/Ukraine/NATO tensions continue to escalate against the backdrop of uncertainty about the timeline of Fed tightening. The S&P 500 shed 2.0% to drop under the 4400 level once more, with the bears now eyeing a test of Monday’s lows in the 4360s, while the Nasdaq 100 dropped 2.9% and the Dow dropped 1.8% to hit fresh lows for the week in the 34,300s. The S&P 500 CBOE Volatility Index rose over three points to the mid-27.00s but was still substantially lower than Monday’s highs at 32.00.
Renewed fighting broke out on Thursday between Russia-backed separatist forces and the Ukraine military in the Eastern Ukraine Donbas region as NATO leaders continued to sound about a potential Russian invasion as the country continued to amass troops. Meanwhile, Russia released its response to US security proposals, criticising the country for not taking its concerns seriously and expelled the US Deputy Ambassador from Moscow. NATO leaders warned that Russia is looking to find a pretext/excuse to take military action against Ukraine and investors are fearful of how any subsequent NATO sanctions against Russia might impact the global economy.
Against the backdrop of already high inflation and further warnings from hawkish Fed policymaker James Bullard on Thursday that the Fed should prepare for the possibility of longer-lasting inflation, the risk that Russian commodity export bans trigger a fresh round of global inflation is a worrying prospect. Further Fed speakers will orate on Friday, including influential policymakers including Fed Vice Chairwoman Lael Brainard and NY Fed President John Williams. Traders will be on the lookout for anything that might suggest the Fed is willing to go big with a 50bps rate hike in March, after the minutes of the latest Fed meeting (released on Wednesday) contained no such bombshells.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended content
Editors’ Picks
EUR/USD struggles to hold above 1.0400 as mood sours
EUR/USD stays on the back foot and trades slightly below 1.0400 following the earlier recovery attempt. In the absence of high-tier data releases, the negative shift seen in risk mood helps the US Dollar gather strength and forces the pair to stretch lower.
GBP/USD declines toward 1.2500 on renewed USD strength
GBP/USD loses its traction and declines to the 1.2500 area in the second half of the day on Monday. The US Dollar (USD) benefits from safe-haven flows and weighs on the pair as investors await US Consumer Confidence data for December.
Gold drops below $2,620 as US bond yields edge higher
After starting the week in a quiet manner, Gold comes under bearish pressure and retreats below $2,620. The benchmark 10-year US Treasury bond yield stays in positive territory above 4.5%, making it difficult for XAU/USD gain traction.
Bitcoin fails to recover as Metaplanet buys the dip
Bitcoin hovers around $95,000 on Monday after losing the progress made during Friday’s relief rally. The largest cryptocurrency hit a new all-time high at $108,353 on Tuesday but this was followed by a steep correction after the US Fed signaled fewer interest-rate cuts than previously anticipated for 2025.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.