US open: Nasdaq tumbles after Snap warning & as recession fears rise

US futures

Dow futures -0.72% at 30113

S&P futures -0.76% at 3635

Nasdaq futures -1.15% at 10910

In Europe

FTSE -0.97% at 6870

Dax -1.3% at 12512

Learn more about trading indices

Yields keep rising

US stocks are set to open firmly lower, with the Nasdaq leading the charge after disappointing earnings from SNAP.

The social media stock which reports ahead of its peers is often considered the canary in the coal mine. Widening losses and dire forecasts spark ad growth fears pulling the sector sharply lower.

In addition to fretting over slowing ad growth and next week’s tech stock earnings, the Federal Reserve’s aggressive rate hiking campaign is also hitting risk sentiment. A steady stream of Fed speakers has been reiterating the US central banks’ commitment to lowering inflation. As a result, fears that the Fed could tip the US economy into a recession are rising.

Despite today’s heavy self-off, stocks are still set to rise across the week, supported by a broadly upbeat start to earnings season from banks and airlines. Earnings will start to ramp up next week, and some cracks are expected to start showing.

Corporate news:

Snap falls 25% pre-market after forecasting 0 revenue growth in the final quarter of the year. Companies that rely on digital advertising are set to fall.

Whirlpool drops 3% pre-market after the household appliances manufacturer cut its full-year outlook due to rampant inflation and slowing demand.

Where next for the Nasdaq?

The Nasdaq failed once again at the 20 sms and falls lower with thin descending channel. The price has broken below support at 11,000 which combined with the bearish RSI keeps sellers hopeful of further downside.  Bears will now look for a break below 10700 the weekly low before bringing 10430 the 2022 low into focus. A break below here creates a lower low. On the upside, a move over 11375 the weekly high, could bring prompt a rise towards 11700 the October high.

FX markets – USD rises, GBP falls

The USD is rising after a string of Federal Reserve officials reiterated the central banks’ hawkish message. The USD is tracking treasury yields higher. USD/JPY continues rising through 151.00 on central bank diversion.

EUR/USD is falling as the market mood sours. Eurozone consumer confidence is due later today and is expected to show that morale has fallen to a new record low in October of -30, down from -28.8 in September.

GBPUSD is falling sharply lower as attention turns to the leadership contest. Boris Johnson appears to be taking the lead ahead of a vote on Monday. Regardless of who takes the helm, the economic picture is very weak amid dire consumer confidence a sharp fall in retail sales, rising interest rates and double-digit inflation. A recession looks impossible to avoid. The question now isn’t whether there will be a recession but how deep will it be and how long will it last?

GBP/USD  -1.1% at 1.1110

EUR/USD  -0.4% at 0.9744

Oil holds steady

Oil prices are holding steady at the end of the week as investors weigh up the prospect of higher interest rates and slowing growth against hopes of China’s easing of COVID restrictions.

Federal Reserve speakers are taking turns to hammer home the hawkish message, raising the risk of higher interest rates choking growth.

Meanwhile, China’s reduced COVID quarantine for inbound travellers could help towards lifting the demand outlook. Hopes are being pinned on some sort of China-led re-opening recovery, but it is still early days.

WTI crude trades +0.4% at $84.90

Brent trades +0.53% at $91.70 

Looking ahead

18:00 Baker Hughes rig count