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US Markets Slide on Recession Fears
US equity markets fell sharply on Thursday, April 10, despite softer US inflation data. The Nasdaq Composite Index slid 4.31%, while the Dow and the S&P 500 declined by 5.53% and 5.46%, respectively. Fears of tariffs driving inflation higher and derailing Fed rate cut expectations impacted risk sentiment.
Dollar assets faced increasing selling pressure amidst waning confidence in the US economy. 10-year US Treasury yields touched a April 10 high of 4.431, up from 3.86% on April 7.
Peter Schiff, Chief Economist and Global Strategist at Europac, warned:
“Gold just topped $3,200. The dollar and stock futures are cracking. 10-year Treasury yield about to break 4.5%. When it does this could spiral out of control. They better get the plunge protection team onboard tonight. That will only make it worse, but it will buy some time.”
On Friday, gold climbed to a record high of $3,220, while 10-year US Treasury yields touched 4.486%.
Will US Data Deepen Recession Fears?
On April 11, investors will likely assess Thursday’s US losses and Asian market trends.
Meanwhile, upcoming US producer prices and consumer sentiment could influence confidence in the US economy. Economists expect producer prices to rise in March and a decline in consumer sentiment. Rising producer prices could signal higher inflation, while a sharp drop in consumer confidence could point to weaker consumer spending, a key driver of US GDP.
Beyond the data, trade-related updates and central bank forward guidance will remain pivotal for sentiment.
Near-Term Outlook: DAX Sensitivity to Macro Risks
The DAX remains sensitive to developments in trade policy, inflation trends, and central bank guidance.
Potential DAX Scenarios:
- Bullish Case: Positive US-EU trade signals, upbeat US data, softer German inflation, or dovish central bank rhetoric could drive the DAX toward 21,000.
- Bearish Case: Renewed trade tensions, higher German inflation, weak US data, or hawkish central bank commentary may drag the DAX toward the April 7 low of 18,490.
As of Friday morning, the DAX futures were up 119 points, while the Nasdaq 100 mini gained 16 points, indicating a positive start to the session.
Technical Warning Signs Flash
Daily Chart:
After Thursday’s rally, the DAX trades above the 200-day Exponential Moving Average (EMA) but remains below the 50-day EMA, suggesting near-term downside risks.
- Upside Target: A break above 20,750 would support a climb toward the April 10 high of 21,300. A decisive move above 21,300 may open the path to the 200-day EMA.
- Downside risk: A drop below 20,500 could signal a fall below the 50-day EMA. A break below the 50-day EMA may enable the bears to target sub-20,000 levels.
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