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Central Banks are raising rates while the markets are in Extreme Greed

ByFederica Montella
Published 08/06/2023, 12:43
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Wall Street finished mixed yesterday

Wednesday has been a negative day for the S&P 500 and the Nasdaq.

Among all three major US indexes, only the Dow Jones has reported a profit.

The S&P 500 finished at -0.38%, the Nasdaq ended the trading session at -1.29% and the Dow Jones closed at +0.27%.

The negative movement has been driven by the fall of tech stocks and the Central Bank of Canada's unexpected decision about interest rates.

In particular, GameStop (NYSE:GME) lost 19%n its share price in extended trading, while its CEO has been replaced.

The investors' sentiment is Extreme Greed, as indicated in the graph below:

Sentiment indicator - Fear & Greed Index

The market sentiment is 76, in “Extreme Greed” mode, up from the previous days.

Central Banks are raising rates

This week, the Canadian Central Bank and the Reserve Bank of Australia increased their interest rates surprisingly.

By doing so, the worries about stuck inflation above its target of 2% have risen.

Investors are now more cautious because the Federal Reserve could also keep rising interest rates.

The FED will meet on 14 June to decide the next monetary policy move, and the number of investors expecting another rate hike has increased (32, 2%) compared to the previous days. The majority of the investors (67,8%), however, are betting on a no-rate hike this time, so on a pause.

What to watch today

At 13:30 pm GMT, the weekly US initial jobless claims will be published.

It is expected to be at 235,000 up from the last week's reading of 232,000.

Financial markets could be volatile today.

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