· S&P 500 TECHNICAL ANALYSIS
Using futures to show after-hours trade, the S&P 500 had its worst day this year so far as prices formed a bearish engulfing at the recent top. Negative RSI divergence accompanied the indexes’ push above key resistance at 2824, showing fading upside momentum. This may precede a turn lower towards support at 2726, especially given confirmation of another close to the downside.
· S&P 500 CHART SIGNALS RISK AVERSION AHEAD
Signs of topping in the S&P 500 stock index – a proxy for market-wide sentiment trends – hint at potent wave of de-risking on the horizon. The index put in a dramatic-looking Bearish Engulfing candlestick pattern and invalidated an earlier push above then-resistance in the 2814-25 area. Negative RSI divergence points to ebbing upside momentum, bolstering the case for a downside scenario.
· European shares opened lower on Monday, amid rising worries of an impending recession in the U.S.
The pan-European Stoxx 600 began the session around 0.6 percent lower, with most sectors and major bourses in the red.
· Investors ditched shares on Monday and fled to the safety of bonds as risk assets fell out of favor on growing fears of a U.S. recession, sending global yields plunging.
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 1.5 percent to a one-week trough in a broad equities sell-off in the region.
“The bond market price action is an enormous blaring siren to anyone trying to be optimistic on stocks,” JPMorgan analysts said in a note to clients.
“Growth, and bonds/yield curves, will be the only thing stocks should be focused on going forward and it’s very hard to envision any type of rally until economic confidence stabilizes and bonds reverse,” it added.
· Japan’s Nikkei posted the biggest daily drop in three months on Monday as investors moved into bonds and other assets perceived as safe amid renewed fears of a global economic slowdown.
The Nikkei share average stumbled 3 percent to 20,977.11, the lowest since mid-February and the steepest daily fall since late December.
The broader Topix fell 2.5 percent to a two-week low of 1,577.41, with all of its 33 subsectors trading in negative territory.
· Chinese stocks fell on Monday tracking a global sell-off, as sentiment for equities soured on growing fears about a U.S. recession, and on caution ahead of fresh U.S.-China trade talks.
The blue-chip CSI300 index fell 2.4 percent to 3,742.83 points, while the Shanghai Composite Index closed down 2 percent to 3,043.03 points.
Reference: Reuters, CNBC
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