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Equities Break Below 61.8% Fibo Support

EMERGING MARKETS
  • The global risk off environment combined with the persistent USD strength continue to weigh on EM equities, which have been constantly testing new lows since the beginning of the month.
  • MXEF index is down nearly 15% since early April and broke below its 1,016.60 support yesterday to test the psychological 1000 level.
  • The 1,016.60 represents the 61.8% Fibo retracement of the 751.80 – 1,445.20 range, a level that was rejected in the middle March.
  • Worst performing sectors so far this year have been :
    • Consumer discretionary (down 28.5%), driven by the dramatic fall in consumer confidence indicators due to surging inflation and Covid uncertainty.
    • Healthcare (down 28.3%), usually considered as a long-duration sector and therefore sensitive to sudden spike in LT yields.

Source: Bloomberg/MNI

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