Fear continues to erode the risk-sensitive market as traders lose faith in the seamless waves of headwinds. The panic triggered by the dark outlook of likely stagflation is spreading wildly across the Asian markets.

ASX 200 dropped 11% from early January, and Japan’s Nikkei reached 10% below its recent high. Hong kong’s Hang Seng is 17% lower than six months ago. The Taiwan index, the best performer last year, has dropped 13% from early this year to this week.

Today, we are looking at three markets:

ASX

The top 200 companies on the Australian stock exchange plunged by just over 5% when the market returned from the Queen’s birthday long weekend, the biggest fall since March 2020.

The ASX 200 has now plunged over 11% from the early days of the year, erasing all the gains during the calendar year of 2021. All 11 sectors suffered heavy losses, including a 7% drop in the tech sector, 6% in mining, and more than 4% in the banking sector.

The panic sell-off reflects the heightened concern in the market that induced the traders to reprice the risk of a US recession and its catastrophic consequence to the global economy.

The daily chart shows that the ASX is now seeking support from the level in Feb 2021 at 6550. The next key level to keep a close eye on will be around 6312, a level that will bring the Australian stock market back to where it was two years ago, before the market crashed due to the pandemic.

S&P 500

The S&P 500 dived into bear market territory early this week, a benchmark defined as more than 20% below its last record close. As a result, the two-year bull run in the US market has officially been consigned to the history books.

Traders are starting to price in the prediction that the Fed will deliver a 75 bps rate increase in this week’s meeting, the biggest since 1994 after US inflation hit a four-decade high in May. This further muddies the economic outlook and constructs a path to a stagflation cycle.

According to the weekly S&P 500 chart, a notable descending trajectory will be the key guideline for the index. Major support provided by the level from February 2021 will be the first stop to expect the following as the index navigates the bear market territory. The defined level at 3851 will be a prominent challenge if the buyers seek a long view.

Bitcoin

The highly risk-sensitive crypto community sinks again as risk sentiment continues to fleet away. Bitcoin's price plunged 19% on Monday to its lowest level in 18 months.

An extra ingredient added to accelerate the selloff has to do with cryptocurrency lending platform Celsius Network. Celcius Network halted withdrawals because of 'extreme market conditions' after the price of the firm's token tumbled by 60% in 24 hours.

The total value of the digital asset market has now dipped below $1 trillion, only one-third of its value in November.

Since early June, Bitcoin prices accelerated the downtrend and extended its monthly losses to 28%. The descending tunnel painted in the weekly chart looks likely to drag the price to the area below 20k, a level that hasn't been seen since December 2020. A break below this threshold will trigger more intense selling action and in terms of resistance, level 26654 will be a significant hurdle to overturn the momentum.

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