Carn the Bloods. But first:
– It’s been a bad night if you are long stocks with some large falls around the globe. Some say it’s the big death cross in the Russell 2000 earlier this week, others that Apple’s woes just filtered out through the market and others that geopolitical risk has risen after Russia passed a law to seize foreign company assets.
– Whatever the cause, the fact the Dow fell 264 points or 1.53%, the Nasdaq dropped 1.94% and the S&P lost a huge 32 points for a close at 1,966, down 1.62%, says the selling was broad-based. Likewise, the fact that there were some large moves in bonds says that this was an asset allocation move as much as anything as we approach quarter-end. In the US, the 10s were down 7 points to 2.5% for a 2.56% capital gain, along with solid falls in German 10s which closed at 0.93% and UK Gilts at 2.45%.
– Traders will be wondering if this is a buying opportunity or the start of something bigger – time will tell but I am still 100% cash in my super and not rushing to buy.
– On the data front overnight, there wasn’t a lot of impact from the big fall in durable goods (-18.2%) due to the Boeing impact the month before, but once the volatile components were abstracted, the print of 0.7% is pretty solid and reinforces the US recovery. Likewise, the jobless claims below 300,000 is a good sign.
– In Europe, the FTSE dipped 0.99% to 6,640, the DAX dropped 1.57% to 9,510 and in Paris, the CAC was 1.33% lower. In Milan, stocks dropped 1.35% while Spanish stocks were 0.68% lower.
– Locally, the SPI 200 futures are looking so weak there is a bonus item of the chart of the rally from 2011 which is very close to breaking. A move below this would be horrific for local trader sentiment – if that’s possible – after the December futures tanked 53 points last night to 5319 bid.
– In Asia the Nikkei hit a 7 year high yesterday rallying 1.28% to 16,374 with exporters gaining as USDJPY headed back above 109 again. CPI data today will be important for the market but likely the weakness in Europe and the US will drive stocks around the region lower. In Shanghai yesterday stocks were largely unchanged after already benefiting from rumours of a change at the PBOC and further stimulus. At the close of play the Shanghai composite was at 2,345 while the Hang Seng fell 0.64% after early European selling drove it lower.
– On Currency markets, the Aussie was helped lower by some verbal intervention from RBNZ governor Wheeler yesterday and it is below 88 cents at 0.8790 this morning, just over a cent above the lows of 2014. The euro is at 1.2751, sterling at 1.6314 and USDJPY looks like it is getting set up to move sharply lower and is at 108.72.
– On Commodities iron ore was poleaxed with Dec futures down $1.88 to $77.67 just 12 cents off the low for this run. December coal fell 15 cents to $66.10 a tonne. Elsewhere on commodity markets, gold is becalmed at $1,222 an ounce and silver is at $17.48. Crude is $92.45 a barrel and copper is still at $3.03. On the Ags, wheat dropped 1.25%, corn lost 0.91% and soybeans fell 1.3%.
On the data front today, Japanese CPI is out and the third read of US GDP tonight will be important.
Otherwise, enjoy your weekend and, in case you missed it earlier, go the Swans.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
Here’s something else Apple stock holders hope won’t bend.
Apple is approaching trend line support just below its 55 day moving average. It currently intersects at around $97.20, about 1.2% below last night’s close. This trend line might be useful when trying to assess 2 big questions – how serious is Bend-Gate and how serious is the current stock market pull back?
A clear break below support at $97.20 would start to look like a full blown correction of the rally from $70.54 that started in January this year. Under that scenario a couple of potential supports would be the 38.2% Fibonacci retracement around $91 of the 50% retracement and 200 day moving average around $86/87.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC