World Bank Issues 2023 Global Recession Warning

Major world markets are still in the blues today, setting up a very clear bearish pattern. In terms of macro in the U.S., the University of Michigan data, due out at 10 a.m. EST, will be scrutinized for clues on inflation expectations. Other reports include Baker Hughes U.S. Oil Rig Count. Market participants could face additional volatility from the quarterly options expiration event known as triple witching, with contracts for stock index futures, stock index options and stock options all expiring, while re-balancing of major equity indexes also takes place. Meanwhile, The World Bank yesterday warned of a global recession in 2023, and said central bank rate-hiking may not be enough to bring down inflation.

Corporatewise, FedEx Corporation (FDX) has plummeted lower by 20% after delivering weak preliminary Q1 results and downgrading its yearend guidance. The package-delivery giant flagged weakness in Asia and challenges in Europe and said conditions could deteriorate further in the current period. Also trading to the downside are shares of General Electric Company (GE) and Huntsman Corporation (HUN). GE has fallen on supply chain related issues while HUN declined as it trimmed its profitability outlook. In Russia, the Central Bank expectedly decided earlier today to cut the key interest rate by 50 basis points, to 7.5%. “The current consumer prices growth rate remains largely subdued, contributing to a further slowdown in annual inflation,” the press release says. According to the Central Bank, inflation expectations of Russians for the next 12 months rose in August to 12%, and in September increased by another half a percentage point, to 12.5%. At the same time, according to Rosstat, in August, some deflation was recorded in Russia for the third month in a row.

European markets are trading lower today as economic growth concerns, expectations for further rate hikes and continued volatility in the energy market weighed on stocks. As of 2:30 p.m. CET, the pan-European Stoxx 600 fell 1.17%, with all sectors in the red. The U.K.’s FTSE 100 was 0.24% lower, Germany’s DAX down 1.67% and France’s CAC 40 fell 1.28%.

Many sectors are trading down 2% or more, including basic resources, construction, and industrials. Auto stocks fell 2.5% despite data showing a rise in new car sales in the European Union for the first time in 13 months. It comes off the back of three days of losses for European stocks, which have particularly dented energy and technology shares.

Asia-Pacific shares also fell earlier today, with the Shanghai Composite 0.96% lower, despite China’s industrial production and retail sales data for August beating expectations. Also, Japan’s Nikkei 225 plummeted 1.11%, Hong Kong’s Hang Seng Index nosedived 0.89% and Australia’s S&P/ASX 200 fell 1.52%, while India’s S&P BSE Sensex plunged by 1.82%.