Nasdaq 100 Sinks as Risk-Off Sentiment Dominates Markets, Commodities Slump


  • U.S. stocks slump on risk-off sentiment, Nasdaq 100 falls as much as 2%
  • Growth-linked commodities, such as oil and copper, also take a beating amid growing recession fears
  • U.S. dollar rallies across the board, EUR/USD briefly breaks below parity

Most Read: US Dollar Price Action Setups: EUR/USD, GBP/USD, USD/CAD, USD/JPY

Risk-off sentiment is dominating price action on Thursday. Investors are growing increasingly fearful that the U.S. economy is headed for a hard landing amid tightening financial conditions. Disappointing corporate earnings and poor profit guidance from major U.S. banks such as JPMorgan Chase and Morgan Stanley are exacerbating the negative tone, but the bad news doesn’t end there. Expectations that the Fed will raise interest rates by 100 basis points at its July meeting, following June’s disastrous inflation report, are making matters worse for risky assets.

Against this backdrop, U.S. stocks are sharply lower in the late morning trade, with the Nasdaq 100 off by about 2%. Growth-linked commodities are also taking a beating on concerns that a significant slowdown will dampen demand for raw materials, putting downward pressure on their prices in the coming quarters. In this context, copper and oil prices are plunging more than 3% at the time of writing, extending their sell-off that began last month.

Meanwhile, the U.S. dollar is rallying across the board on the flight-to-safety move witnessed across markets, with the DXY index up about 0.9% to 109,00, its highest level since September 2022. With traders aggressively dumping high-beta currencies, the EUR/USD briefly broke below parity, falling as low as 0.9952 before stabilizing around the 1.0000 handle.

Looking ahead, recession angst is not likely to abate any time soon; in fact, the state of anxiety may increase in the coming days when U.S. companies release their financial statements during the current reporting period. Quarterly results and forward-looking commentary could continue to underwhelm expectations, reinforcing the notion that the U.S. economy is headed for trouble. In this environment, risk assets may struggle, while the US dollar may reign supreme, especially if volatility levels pick up.

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