Thursday Market Insights: US Downgrade Takes Center Stage

Thursday Market Insights: US Downgrade Takes Center Stage
Hello traders, as we wade into the waters of Thursday's market landscape, the ripple effects of a significant financial announcement are clearly evident. Fitch Ratings delivered a sharp blow to the US's financial reputation by downgrading its long-term foreign currency issuer default rating from AAA to AA+. This move, which surfaced late on Tuesday, is largely being attributed as the catalyst for the sharp slide in stocks and indices.
The correction's weight is palpable, with indices like the Dow Jones still teasing their long-term highs. However, the writing on the wall indicates an imminent bearish correction. With the Dow Jones targeting the 34,550 points region, Nasdaq seems to be on a path toward the 15,250 points horizontal support. Concurrently, Germany's DAX is gearing up towards the 15,750 points mark for its horizontal support. If the present market momentum is anything to go by, these indices are likely to brush these support levels in the near term.

Turning our gaze to the economic calendar, some noteworthy events unfolded. New Zealand's job market showed signs of strain as its unemployment rate crept up to 3.6%. On the brighter side, the US cheered the ADP non-farm employment change figure, which pleasantly surprised at 324,000. But the world of oil brought in a twist. The largest weekly draw in crude oil inventories historically would be an upbeat sign for oil prices. Yet, in a surprising turn, oil buckled under the might of the strengthening dollar. In just one day, the commodity's price chart witnessed a regression, erasing four days of progressive gains.

On the currency front, the pendulum swung favorably for the US dollar and the Japanese yen yesterday, both marking gains. The New Zealand dollar, Australian dollar, and the euro, however, languished at the lower end. While today saw the yen taking a slight breather, the US dollar's march seems relentless and pronounced.

The earnings calendar too isn't devoid of action. Qualcomm's recent release highlighted a commendable EPS, albeit with a slight shortfall in revenue. As the day progresses, eyes will be trained on tech behemoths Apple and Amazon, both slated to release their earnings. In the travel sphere, Booking and Airbnb are also prepped to showcase their figures post the American session's close.
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