Stock Market Trading: 26 September 2014
We saw a sharp sell off in US stocks yesterday following signs that geopolitical risk is increasing and starting to have a bigger impact on investors' psychology.
As such, the Dow slumped 226 points to 16,991 on the deepening conflict in the Middle East and rumours that Russian lawmakers are about to authorise the confiscation of foreign assets.
European stocks are set to open flat today, but as we've seen this week the opening sentiment has had little bearing on where they have closed.
Quite what has got CFD
markets into such a spin isn't too apparent as pundits are putting it down to everything from geopolitics, weak fundamentals, overbought technicals and even seasonality around Jewish New Year.
Stock Market Trading: 25 September 2014
Yesterday belonged to US bargain hunters who stepped in after two days of heavy losses for the Dow and pushed for a rebound of 195 points to 17,216.
The day's US economic data undoubtedly helped the case as new home sales surged last month to the highest level in more than 6 years, suggesting that progress is being made by the housing sector.
Despite the strong finish in the US and gains in Asia, European equities are set to open flat this morning.
Yesterday's gains in Europe were only a modest attempt to lessen the damage as indices are still well down on the week.
The up move was partly due to Draghi whipping up hopes of stimulus again.
Also overnight, reports that Draghi had given a dovish interview to a paper going to print today hit the news wires, which saw an immediate effect in currency markets
However, on first glance this confidence doesn't seem to have filtered through to sentiment in equity markets, although it's still a bit early at the time of writing.
The problem with Draghi is that he is the quintessential central banker that cries wolf, so it's unlikely that he will be able to levitate markets with the same story again.
Stock Market Trading: 24 September 2014
With negative cues continuing to stack up, European shares are set to slide this morning.
The bombings in Syria have seen geopolitical risk ratchet higher, but also the rebel held regions of Ukraine announced overnight that they will be holding their own independence votes.
The uneasy truce between the Ukrainian government and the rebels has only been in place for a few weeks and the brewing concern is that putting a definitive flash point on the calendar will force a confrontation.
Ukrainian President Petro Poroshenko hasn't commented yet, but it seems inconceivable to traders that he'll just let the rebel held areas secede without a fight.
A mixed bag of PMI data yesterday sparked worries about the global economy and Japan continued the theme overnight by coming out with a weak Manufacturing PMI reading of their own.
There's a slightly quieter calendar today but the German IFO confidence index could be a drag on sentiment if it continues in the same vain as the other downward pointing data.
A slump in healthcare stocks led the sell off in the Dow Jones yesterday which endured another triple digits loss, closing 144 points in the red at 17,019.
The US index reached fresh record highs last week so taking some profits off table seems like a sensible move.
It remains to be seen whether this pullback will attract enough investors to step in and help us rebound or whether a more significant correction is underway.
Stock Market Trading: 23 September 2014
Stock markets in Europe are set to start mixed as investors continue to reel from yesterday's declines.
Pundits put the move lower down to profit taking and Chinese growth concerns so there should be some relief when traders digest the surprising uptick in the HSBC Flash Manufacturing PMI overnight.
had been building up a picture of a cliff edge decline in the Chinese economy and saw the slump in industrial production a couple of weeks ago as a precursor to last night's data.
Manufacturing is also set to be the flavour of the day across the other regions as we get data from Europe and the US.
With US existing homes sales surprisingly dropping yesterday, we saw a sharp sell off in the Dow Jones which closed 139 points lower at 17,152.
In addition, China's Finance Minister admitted that his government will not make any policy adjustments despite signs of a possible slowdown in economic growth.
That put further downside pressure on stocks, restricting any potential rebound.
Stock Market Trading: 22 September 2014
European equities are set to track Asian markets lower on the open.
Despite a brief relief rally on Friday following the Scottish Independence result, markets started a downward slide that is set to continue this morning.
There doesn't seem to be any specific reason for the declines, although some are offering up either profit taking or jitters ahead of this week's HSBC China Manufacturing data as possible explanations.
However, considering that the markets have been impervious to any bad news of late, it makes a certain kind of inverse sense to sell off on nothing in particular.
In the US, the Dow Jones
rose to a record high of 17,364 in early hours of Friday on the feel good factor of Scottish voters choosing to stay within the UK.
Nevertheless, just as in Europe, the markets retraced steadily afterwards, though the Dow managed to close 8 points up at 17,293.
American economic data keeps improving and so sentiment remains pretty optimistic as traders prepare for an end to QE and, eventually, a rate hike.
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By Jonathan Sudaria, 26 September 2014