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Rate hike, war weighing heavily on stock markets

Content image - Phnom Penh Post
Analysis by Golden FX Link Capital business manager Long Samnang

Rate hike, war weighing heavily on stock markets

The stock market has continued to fall due to geopolitical pressures and uncertainty surrounding a raising of interest rates.

As a result, on Tuesday the S&P500 was down 0.02 per cent and the Nasdaq dropped 0.14 per cent, while the Dow Jones Industrial Average dipped 0.11 per cent.

The Russia-Ukraine war that started in late February is clearly taking a toll on global stock values.

According to the US Bureau of Labor Statistics, the Consumer Price Index for March was 1.2 per cent as expected and left the annual inflation rate at 8.5 per cent, the highest since 1981.

This clearly signals a rate hike, and data from US Federal Reserve officials indicates that the Fed will raise interest rates by 0.50 per cent.

US 10-year Treasury bonds have risen and are currently trading at 2.838 per cent, up from 1.7090 per cent on March 1, indicating that the demand for bonds has increased.

Interest in securities that provide fixed income is increasing, boosting the value of the dollar and increasing pressure on the stock market.

The dollar index is currently trading at 100.86.

The VIX – the Chicago Board Options Exchange’s CBOE Volatility Index – is trading at 22.17, indicating that fear is beginning to emerge in the stock market.

For this week’s trading recommendation, investors can sell Nasdaq (Nas100) at 14000, setting the stop-loss function at 14170 and the take-profit function at 13600.

Content image - Phnom Penh Post

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