Good morning! ATTENTION!!! Here’s a summary of the current market scenario. I will try to explain what each term you are seeing in the news means and its relevance.
The MAIN focus this morning is on the opening of the U.S. Stock Exchange and analysis of the S&P500, the main global benchmark index. We will monitor developments to define strategies for the day.
1. INTERNATIONAL HIGHLIGHTS — GLOBAL PANIC
Japan's stock exchange activates “circuit breaker” after a drop of more than 8%.
The Japanese index opened down 6% and deepened losses rapidly.
The Chinese CSI300 index fell over 5%, with sales across all sectors. The yuan hit its lowest level since January.
The pan-European index STOXX 600 plunged 5.8%, recording the largest drop since the pandemic.
The DAX index in Germany fell 6.6%, with Commerzbank and Deutsche Bank losing 10.7% and 10%, respectively.
The drop was driven by NY futures, indicating a possible bloody opening in the U.S.
WHAT IS A “CIRCUIT BREAKER”?
It is an automatic brake triggered when a stock exchange experiences abrupt drops in a very short period (such as 7%, 13%, and 20%, in the case of B3). It serves to prevent uncontrolled panic movements and give the market time to absorb information.
In summary: the use of the circuit breaker is an emergency mechanism that temporarily halts trading to contain panic and try to stabilize the market.
2. TRADE WAR AND BOTTOMING OUT
Hedge funds are capitulating: Several funds are liquidating positions or selling everything they have in stocks, mainly in the U.S.
With the losses, investors are being pressured by margin calls, forcing more sales and feeding the decline.
This happens due to the possible trade war initiated by Trump, which wiped trillions of dollars in market value.
3. GOLDMAN SACHS RAISES CHANCE OF RECESSION IN THE U.S. TO 45%
The investment bank Goldman Sachs, one of the most influential in the world, has revised its projections again and now believes there is a 45% chance of recession in the U.S.
The increase in this percentage in such a short time is concerning, as Goldman usually has analyses with significant weight in global financial markets.
WHAT IS RECESSION?
Recession is when an economy contracts for two consecutive quarters, meaning it shrinks instead of growing.
This means less consumption, less production, increased unemployment, and a drop in corporate profits.
For the market, it is a maximum alert signal, as it directly impacts investments, interest rates, and country risk.
These are the main updates this morning; obviously, I only brought a summary to try to explain some points. Seek to follow reliable news sources outside the community.
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