Stock Market Analysis: Market Rout Worst in Two Years | Online …
* US stock markets pared early losses, but still closed lower for the session, as traders digest economic data and the impactions on rising interest rates.
* European stock markets slumped again Friday, recording their worst week in two years, as the geopolitical situation hit home after further sanctions were imposed upon Russia.
* Asian stock markets fell again on Friday, backing off six years highs and recording their worst weekly performance since February.
* Commodities prices fell. Gold prices rose to $US1,294, while crude-oil fell to below $US98. Copper edged lower to US3.215c.
The Australian sharemarket began August on a sour note, with the ASX200 index down -1.4% at 5556, its biggest single session loss in four months, after recording a 4.4% gain in July. Local investors follow the lead of overseas markets, giving back all the gains for the week. The worst performing sector was Healthcare down -2.6% (CSL fell -3.6%), while the Financials and Materials sectors fell over -1.3%, as Westpac slid -1.6% and Fortescue Metals gave back -4.9%.
Investors ignored the positive read on the health of Chinese manufacturing sector. We are leading up into a strong period for the Aussie market, which has risen 80% of the time in the past decade and this strength generally holds through to mid- September.
Overnight global markets have sold off due to the ongoing weaker corporate earnings reports in the US and Europe and the realisation that the stricter Russian sanctions will impact company profits and global growth going forward.
The SPI 200 futures are down -0.5% to 5473, giving another negative lead for the ASX market today, as the US and EU markets sold down. The 5550 level will be key for the ASX200 today. The Australian dollar edged up to US93.1c. ANZ jobs data is due out today.
The S&P500 US market is pulling back.
US Markets
US stock markets pared early losses, but still closed lower for the session, as traders digest economic data and the impactions on rising interest rates. The markets had their worst performance in two years.
The three benchmark indexes down -0.4% for the session. Seven of the ten S&P500 sectors finished in the red, led by falls in the Energy and Financials sectors down -0.8%, but Consumer Staples bucked the trend up 0.8%. The VIX jumped over 27% last week to 17.0.
The S&P500 retreated from record levels down -2.7% for the week and has now pared its gains for the year to 4.2%. The Dow Jones index fell to two month lows, the Dow Jones fell -1.5% in July and had its worst week this year falling -2.8%, erasing the gains for the year. The Nasdaq fell -2.2% for the week. The Dow Transport Index has fallen -4.6% in the past week.
The correction they had to have – the US markets are on their third longest winning streak in 25 years, going over 1000 days without a -10% correction (since 2011) and have not experienced a sell off of more than -7% for a year and a half. The Nasdaq 100 index is vulnerable, as only four companies make up 35% of the index, Apple, Google, Intel and Microsoft.
The US earnings season continued when better than expected earnings report came from LinkedIn which rose 11.7% and Procter & Gamble Co which finished up 3% and was the performing the best among the 30 Dow stocks, but Western Union dropped -4% after quarterly profit fell. Of the S&P500 companies that have reported 79% have beaten on profits, 65% beat on revenues, while 66% beat sales forecast.
In economic news the US economy added 209,000 jobs in July and unemployment is at 6.2%, missing forecasts. The sixth straight reading above 200,000 is signaling the economy is sustaining its momentum, while the Institute for Supply Management (ISM) manufacturing index rose more than expected, and a reading on consumer sentiment slipped slightly, but was in line with expectations. The S&P Ratings agency has declared Argentina is now in a state of selective default.
For the session Dow Jones closed down -0.4% at 16,493, the S&P500 closed down -0.3% at 1,925 and the NASDAQ closed down -0.4% at 4,352, while on 10-year slumped to 2.49%.
European Markets
European stock markets slumped again Friday night, recording their worst week in two years, as the geopolitical situation hit home after further sanctions were imposed upon Russia.
The Stoxx Europe 600 Index closed down another -1.4% for the session, recording its worst performance for three weeks. Trading volumes were above the monthly average. Banco Espirito Santo was suspended after plummeting over -40% after the Portuguese lender was ordered to raise capital after it reported a $US4.8 billion loss. Sellers continue to outweigh buyers as the EU imposed sanctions on Russia to restrict access to the capital markets. Geopolitical tensions continued to simmer, with the continuing violence in Ukraine and the Gaza Strip.
The London markets fell -1.8% for the week, the most in three weeks, led by falls in the miners, as traders turn to de-risk their portfolios. UK manufacturing grew at the slowest pace in a year, with the PMI easing to 55.4 in July (down from 57.2). The German market slumped -4.5% for the week, on concerns of geopolitics and caution over the impacts of the EU limits Russia’s access to capital markets. In earnings of the Stoxx Europe 600 that have reported 57% beat on profits and 51% beat on sales, according Bloomberg.
For the session the German DAX 30 closed down -2.1% at 9,210, the UK the FTSE 100 closed down -0.8% at 6,679, the French CAC 40 closed down -1.0% at 4,202, while the Spanish market closed down -1.8% at 10,514.
Asian Markets
Asian stock markets fell again on Friday, backing off six years highs and recording their worst weekly performance since February.
The MSCI Asia Pacific Index was down another -0.8%, as nine of the ten industry groups finished in the red. For the week the index closed down -1.0% for the week, after it finished up 2.6% for July, to trade at its highest levels in six years. In earnings of the corporates that have reported on the MSCI Asia Pacific Index since the start of July, 60% have beat on earnings.
The Chinese market finished the week down -0.7%, despite the HSBC final manufacturing PMI coming in at 51.7 (up from 51.0), slightly lower than expected. The Chinese market recorded its longest winning streak in a year and is at its highest levels in seven months, last week. The corporate earnings continues until the end of August.
The Hong Kong markets finished the week down -1.3%, after trading up to its highest level since mid-November 2010 and has entered into bull market territory after rising 20% from its March lows. The market went parabolic and is vulnerable to further downside. The Japanese market backed off six month highs, as investors digest corporate earnings, in the first quarter since sales tax was raised back in April.
For the session the Shenzhen Composite down -0.9% at 2,329, the Hong Kong Hang Seng closed down -0.9% at 24,532, and the Japanese Nikkei closed down -0.6% at 15,523, while the South Korean KOSPI closed down -0.2% at 2,073.
Commodities
The Dollar Index edged lower to 81.30 (off its highest level for a year) on a higher Euro, and the Aussie Dollar up to US93.1c. Commodities prices fell.
Overnight the NYMEX WTI Crude delivery down -0.3% at $US97.90, the COMEX Copper closed down -0.5% to 3.215, the COMEX Gold closed up 0.9% at $US1,294.80.
ASX News
ERA – Energy Resources of Australia has reported a 1H14 net loss as the uranium price hovers around nine year lows amid weak demand.
KMD – Kathmandu says a colder than expected July has saved adventure clothing retailer from the earnings fall it expected.
LYC – Lynas Corporation shares have slumped, with investors disappointed by a fall in prices and the troubled rare earths miner’s ongoing cash flow problems.
NST – Northern Star the gold mioner has easily beaten its quarterly production target following a string of acquisitions.
OGC – OceanaGold, which operates the goldfields in Otago and Buller, has posted a 1H14 profit as its Didipio operation in the Philippines helped lift first-quarter earnings to a record.
ORG – Origin Energy has increased quarterly production by eight per cent due to higher seasonal demand and higher production from its Australian Pacific LNG project.
RMD – ResMed shares slumped after it reported soft sales in the US, although it raised full-year profit.
SHL – Sonic Healthcare will partner with leading London hospitals to establish a state of the art pathology and analytics service for the UK’s National Health Service.
WPL – Woodside Petroleum shareholders have blocked a $US2.7 billion plan to remove Royal Dutch Shell from the company’s share register.
Market Summary
ASX – to open lower
US & UK/Europe – sharply lower
ANZ -0.2%, NAB -0.3%, NWS 0.9%
AWC -2.5%, BHP -0.2%, RIO -1.1%, NEM -1.2%
By Michael Hevern D2MX Investment Advisor For trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, call 1300 610 024 or email [email protected].
Tags: Asian Markets, ASX, ASX News, Business News, Commodities, Crude Oil, European Markets, Ex Dividend, gold price, Nasdaq, Stock Market Analysis, stockmarket, trading, US Market wrap
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Stock Market Analysis: Market Rout Worst in Two Years | Online …
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