Financial markets today have no color than Red, as risk is leading the charts.
A report about a record spike in new COVID-19 cases in several Chinese cities at the beginning of the week was the most worrying news! New lockdowns in several financial hubs including the capital Beijing and economic center Shanghai after last week's weak economic data can increase the level of risks in financial markets. With these new lockdowns and quarantines, Chinese economic growth in the third quarter can slow down once again. I should remember that last week's published data showed that the world's second-largest economy faced growth weakness in October and with this news, it can continue in the following months.
On the other hand, concerns of a potential nuclear crisis in the Russia-Ukraine conflict, after heavy shelling of Ukraine’s Zaporizhzhia atomic power plant in the last few days, driving safe haven flows into the US dollar and increasing pressure on risky assets, including cryptocurrencies and stock markets. The US dollar's bulls have also been supported by hawkish signals from Federal Reserve officials last week.
In addition, the risk of an economic recession is heating up as most central banks around the globe tighten their monetary policies. Last week, the United Kingdom, one of the world's major economies, clearly judged that its economy has fallen into recession and will last for more than a year. A recession is matched by a sharp demand slowdown, while inflation rose above 11%.
In response, leading indices in Asia, Europe, and US futures lost about 1% on average and it is expected to see the same slowdown for the next few days, as long as market sentiment is risky.
