Stock markets are back in the red on Tuesday, with US futures also pointing to a negative start on Wall Street in a couple of hours.
These wild swings from one day to the next have become the norm as investors try to pick the bottom in the markets only to be dealt another blow from one negative headline or another.
And they continue to come thick and fast, leaving equity markets vulnerable to further drops.
Pessimistic Chinese growth forecasts and a profit and revenue warning from Snap (NYSE:SNAP) appear to have been behind the latest tumble, although there are so many headlines pouring out, you could probably pick another half a dozen reasons to explain the selling.
Ultimately it comes down to the fact that the level of economic uncertainty is immense and while recessions are not the base case, they are a very realistic prospect.
Not least in the UK, where PMIs slipped back to levels not seen since lockdown. Except that the economy is fully open and operating without any restrictions at all, which is deeply concerning.
The cost-of-living crisis is already having an impact and is expected to hit the economy hard, with the BoE anticipating double-digit inflation and a possible recession.
The PMI data appears to be backing that up, with the services survey falling heavily from 58.9 last month to 51.8 this. That’s barely in growth territory and a hugely negative shift.
The squeeze on household budgets is going to intensify later in the year which creates a feeling of inevitability about a recession. Perhaps that’s why we’re starting to see attitudes shift within government although as yet, we haven’t seen any new measures announced.
Bitcoin consolidation continues
There hasn’t been much change over the last week or so on the Bitcoin front. It continues to bounce around USD 30,000 with moves below not gaining much traction to the downside and those above the same.
It continues to look vulnerable below as there simply isn’t much of a bullish case for it in a monetary tightening and risk-averse environment. If we start to see markets pricing in fewer hikes then it may change, but that looks a little hopeful at this point.