Wednesday December 7th

U.S. stock index futures slid Wednesday, with traders fretting over the possibility of a recession as the Federal Reserve could raise rates for longer than expected. Futures tied to the Dow Jones Industrial Average were down 142 points, or 0.4%, while S&P 500 futures lost 0.6% and Nasdaq 100 futures traded lower by 1.1%. Wall Street is coming off another tough session, with the Dow falling more than 350 points, or 1.03%. The S&P 500 and Nasdaq Composite lost 1.4% and 2%, respectively. Investors have been losing hope that the Fed will be able to engineer a so-called soft landing that successfully tamps down inflation through higher rates and also avoids a recession. Instead, concerns are swirling around the state of the economy and the likelihood of a downturn in 2023. “All told, financial indicators point to a recession on the horizon,” wrote Wells Fargo’s Azhar Iqbal in a note to clients Wednesday. “The S&P 500 has peaked ahead of recessions with an average lead time of four months over the past few business cycles. Taken together with the inverted yield curve, markets are clearly braced for a recession in 2023.” Investors await more economic data this week for clues on what to expect from the Fed. Mortgage loan application data showed a decline last week despite a fall in rates. The tail end of earnings season continued with a solid report from Campbell Soup. Hong Kong stocks saw sharp declines, leading losses in the Asia-Pacific after China announced further easing of Covid measures, a move that was widely expected. Airline stocks maintained some gains, while casinos and technology-related stocks fell into negative territory shortly after the announcement. The nation’s trade data for November came in lower than expected, according to customs data. The Hang Seng index was 3.22% lower at 18,814.82, and the Hang Seng Tech index fell 3.77%. In mainland China, the Shenzhen Component was up 0.175% at 11,418.76 while the Shanghai Composite slipped 0.4% to 3,199.62. Hang Seng index briefly rises before dropping around 3%. The Nikkei 225 in Japan was down 0.72% at 27,686.40 and the Topix was 0.1% lower at 1,948.31. South Korea’s Kospi lost 0.43% to 2,382.81. In Australia, the S&P/ASX 200 fell 0.85% to 7,229.40 as the nation’s economy grew by 0.6% in the third quarter. Oil briefly weakened on Wednesday, with Brent crude falling close to its lowest this year, pressured by concern about recession and easing fears that a Western cap on Russian oil prices would significantly curb supply. Warnings from big U.S. banks about a likely recession next year weighed, and supported the U.S. dollar. A stronger dollar makes oil more expensive for holders of other currencies and tends to dampen appetite for risk assets. Brent crude touched $77.74 earlier, the lowest since Jan. 3, before rebounding to trade at $79.40 per barrel. U.S. crude reached its lowest level since late December before recovering to trade 0.2% higher at $74.37. Gold prices ticked up on Wednesday as the dollar eased but kept to a tight range as investors eyed next week’s U.S. Federal Reserve meeting for confirmation on its interest rate hike trajectory. Spot gold rose 0.2% to $1,774.37 per ounce by 1137 GMT. U.S. gold futures edged up 0.2% to $1,786.30.