News & Analysis
U.S stocks continue rout Dow and SP500 erase 2018 gains – Oil bounces after fuel stockpile decline – EUR tumbles on Eurozone growth worries
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Overnight stocks made heavy losses in U.S and Europe, the Dow lost 608 points give back all of 2018’s gains. sharp losses in tech and worries about corporate earnings added fuel to this month’s strong pull back. The Nasdaq was hammered losing 329.14, Facebook, Amazon, Netflix and Alphabet all dragged the index lower. The S&P500 lost 84 pts moving into negative territory for 2018.
“An increasingly murky macro picture is clouding the 2019 earnings outlook leaving investors to largely shrug off a solid start to the third quarter earnings season,” said Alec Young, managing director of global markets research at FTSE Russell. “While valuations have certainly come down in recent weeks, at 16 times forward earnings for the Russell 1000 index, they aren’t in the bargain basement by any means, especially if earnings growth slows more than expected next year.”
The Cboe Volatility Index (VIX), traded above 24 on Wednesday, up more than 100% this month.
European shares mainly closed lower but faired better, the FTSE closed 7.77 pts higher, the DAX lost 82. Deutsche Bank shares fell 4.76% on Wednesday after the German flagship lender said it was on track to swing to profit this year, despite reporting a steep decline in third-quarter profit. Europe’s banking index — the worst-performing sector so far this year — edged 1.35% lower on the news. German business activity slowed to a near three and a half low in October.
Oil settled higher after a larger than expected draw on fuel stockpiles. The U.S. Energy Department said gasoline stocks fell 4.8 million barrels to 229.3 million barrels last week, the lowest since December 2017. Distillates, which include diesel, were down 2.3 million barrels, both more than forecast. – CNBC – EIA. USOUSD settled 23 cents higher after pulling back from a 134 cent high.
Gold added 3.50 after fighting back for the red, buyers returning as equities continued to be sold off. This morning price is testing 1235 highs. Overnight the EUR and GBP were hit hard to the USD and JPY. The EUR moved lower on Eurozone growth worries after German flash PMI showed a drop in business activity growth. The GBP was hit by intensifying concerns about whether the UK can reach a Brexit agreement. The USD increased but lost ground to the Yen. The AUD put up a fight but lost ground into the NY session to the JPY and USD. The Cad jumped after the BOC raised rates to 1.75%.
Risk FX is higher this morning to the USD but remains softer to the JPY. The ASX200 is deep in the red trading 108 pts lower.
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Sources; CNBC – All times are AEDT
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