- Since the Fed hiked interest rates, the demand for goods and services has been affected.
- A weak retail and manufacturing output is also weakening the financial markets.
There are concerns the global economy could be headed to a recession; something combined with a slowing labour market and rising unemployment, has caused a slide in the price of major stocks.
According to the US Department of Labor, the number of Americans filing unemployment claims rose in March, signifying a slowing labour market since the Federal Reserve’s interest rate hike affected the demand for goods and services.
Across the global financial markets, in a report by Reuters, the Asian stocks plunged Friday to the lowest in the weekly chart in about one and a half months. The MSCI’s index of shares outside Japan dropped 0.9% to as low as 1.7%, the worst performance since the banking crisis last month. Tesla stock, for instance, is among those that witnessed selling pressure, dropping 10% on Thursday.
Impact On The Forex Market
The slowing economy has also impacted the forex market at a time traders are speculating a 25 bps in the US rate cut this year. For example, the euro is around last week’s one-year high at $1.0971, while the Yen jumped to 133 to the greenback in the period. On the other hand, the economic data shows that Aussie and New Zealand dollars dropped this week.
Meanwhile, the fear of a recession is growing. Christopher Rupkey, the chief economist at FWDBONDS, recently said, ‘‘after months and months of watching, for the first time, we can say we see a recession coming, and it will be a miracle if we don’t have a downturn in the economy.’’
