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Dow continues plunge; Stockpiles add to Oil’s pain; Gold surges; Bitcoin sell-off due to stock margin calls!

Oct 12, 2018 | Market Updates

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The plunge continued as investors and traders jumped out of equities for a second day. The Dow lost a further 545.91 points, a drop of over 1300 points in two sessions. Fears of rapidly rising interest rates, a possible global economic slowdown and tech valuations continue to hurt sentiment. The S&P500 lost 57.31 pts price closed below its 200 day moving average for the first time since April. The Nasdaq closed 92.99 points lower briefly entering correction territory at its lows on Thursday.

October, a month known for major market sell-offs in the past, has been a brutal month for investors so far. The S&P 500 has lost 6% during the month so far and is now higher by just 2% for 2018. – CNBC “It’s a momentum correction, not a portfolio correction,” said Joe Terranova, chief market strategist at Virtus Investment Partners. “While we have a bias to believe 2008 could happen again, I don’t think this is the case.” “Less is more in this environment,” Terranova added. “I think you need to be an observer of the guidance you get in earnings.”

European equities continued to fall, led lower by the continued sell over the Atlantic. The DAX closed 173 and the FTSE closed 138 pts lower. Brexit is largely in focus after the European Union’s chief Brexit negotiator, Michel Barnier, struck an optimistic tone on a deal for the U.K.’s eventual withdrawal from the bloc, saying an agreement was achievable as soon as next week. Barnier stressed, however, that the U.K. remaining in the customs union would be the best possible solution to avoiding a hard border between the Irish mainland and Northern Ireland.

Oil slumped for a 2nd day losing a further 3%, price-led lower by further losses in equity markets and a surprise U.S stockpile rise. U.S. crude inventories rose 6 million barrels last week, the Energy Information Administration said, more than double analysts’ expectations of a 2.6 million-barrels increase. OPEC cut its forecast of global demand growth for oil next year for a third straight month. With a raft of negative news, USOUSD dropped 171 cents settling back below $71.

Gold saw its safe haven status return, jumping $29 off the back of the equity panic. Price making 2-month highs closing at 1223.77, what’s given Gold a hand this time is the fact the USD hasn’t seen safe-haven demand. Risk FX rallied to the USD overnight. CPI data came in as expected at 0.2%. The Dollar fell to a near two-week low on Thursday.  The GBP, EUR and AUD all adding over 30 pips. The EURUSD jumped adding 70+ pips hitting 6-day highs. Despite sharply lower oil prices, the USDCAD fell by 36 pips. Risk rebounded to the JPY after the last sessions sharp losses, the AUDJPY adding 71 pips.

Bitcoin was also hammered in yesterday’s trade dropping 340 USD. The sell-off is thought to have started in Japan as Japanese day traders were forced into selling their Bitcoin to pay for substantial margin calls in the stock market!

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Sources; CNBC – All times are AEST

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