Markets In Sell Off Mode

Published by Filipe R. Costa on Wed, 24/10/2012 - 10:48
bear market

Daily Market Commentary for October 24: Markets continue in downtrend mode due to weak corporate earnings. Not even gold was able to find some support and ended the day below $1,710. The Euro also suffered from a Moody’s downgrade to several Spanish regions.

Things are getting ugly with the Dow approaching the 13,000 level. A few days ago, it seemed that everything was ok with the Dow nearing 13,600 but corporate results are hammering stocks. Companies in certain cases present earnings in line with street estimates but the problem is with future revenues. Most of them are just downgrading prospects.

The launch of QE3 by Ben Bernanke aimed to inflate stock prices but for now those efforts have been frustrated. The S&P 500 is down 1.63% since the launch of QE3.

During the night the Aussie was lifted up by CPI data showing a 1.4% increase over the last quarter.  Analysts were looking for just 1.0%. CPI in Australia is 2.0% higher from last year.

Early in the morning, PMI data in Europe was released pointing to contraction once again. The composite EZ index showed a reading of 45.8, weaker than expected, whilst the manufacturing index was also weaker. In Germany the index IFO showed a poor reading.

Given the poor European data and the increased Australian CPI, it is time to short the EUR/AUD pair. It seems a good entry point. For now things continue to look bad. The FTSE is trading below 5,800 and the Euro at 1.2940.

Name Last price Close Since QE3 Price % 5-Day % YTD %
EUR/GBP - £ per Euro 23/10/2012 0.8135 1.54 -0.29 0.1 -2.36
Nikkei 225 23/10/2012 9014.25 0.61 0.04 3.6 6.61
EUR/USD - US$ per Euro 23/10/2012 1.2974 0.55 -0.73 -1.01 0.15
FTSE 100 23/10/2012 5797.91 0.27 -1.44 -1.24 4.05
GBP/USD - US $ per £ 23/10/2012 1.595 -0.97 -0.46 -1.1 2.7
Gold (LBM) $ 23/10/2012 171010 -1.28 -0.88 -1.91 9.14
S&P 500 23/10/2012 1413.11 -1.63 -1.44 -2.87 12.37
Dow Jones Industrial Average 23/10/2012 13102.5 -1.73 -1.82 -3.32 7.24
DAX (Xetra) 23/10/2012 7173.69 -2.31 -2.11 -2.75 21.62
IBEX 35 23/10/2012 7747.7 -3.06 -1.64 -2.42 -9.56
CAC 40 23/10/2012 3406.5 -3.87 -2.2 -2.7 7.81
Nasdaq 100 Index 23/10/2012 2666.02 -4.5 -1.06 -4.04 17.04
FTSE MIB 23/10/2012 15579 -5.12 -1.81 -2.54 3.24
Crude oil (Brent) Composite 23/10/2012 10712 -6.8 -1.44 -5.42 -0.27
Crude oil (Light Sweet) Composite 23/10/2012 8669 -10.58 -2.86 -6.26 -12.43