Wall St tumbles on recession fears, the Fed in focus

US equities sold off throughout the session in risk-off trading with a backdrop of corporate warnings from heavyweights Walmart (WMT) and McDonalds (MCD) , weak economic figures and a downbeat tone from Europe as their gas squeeze continues.

A larger than expected decline in U.S consumer confidence, down for a third straight month, saw the narrative of the strong U.S consumer take a hit and saw investors trimming equity exposure ahead of todays closely watched FOMC policy meeting.

News out of Europe where news that the Nordstream 1 pipeline will only run at minimal levels due to technical difficulties added to the sombre market tone, the Euro took a hit being the worse performing G10 currency against the USD, Nat Gas surged to test it’s 14 year highs set in June, breaking above $9 before pulling back later in the session.

The USD benefitted from Euro weakness and the risk off tone to the market with the US Dollar index retaking the 107 handle and the Euro pushing back down to the 1.01 level.

Cryptos extended yesterday’s losses overnight after a report that Coinbase is facing a SEC probe and insider trading allegations. Bitcoin fell back below $21k and Ethereum back below $1400, this also saw the Coinbase (COIN.NAS) stock price tumble over 20% on big volume.

Economic announcements

The big one today will be the FOMC policy meeting at 2pm New York time where the Federal Reserve is widely expected to hike rates by 75bps, with the US bond futures pricing in a 13% of a 100bp hike and the  guidance the FOMC provides on future tightening increments, volatility in USD FX crosses is almost a certainty.

Australian Q2 CPI figures will also be released today at 11:30am Sydney time, an elevated reading is expected, how elevated (or not) should see the market re-pricing it’s prediction of the size of the RBA’s next hike at its meeting next week.