A daily summary of global market price action & what caused it – to help investors and traders of forex, stocks, indexes etc. get into context for the week ahead in global financial markets.
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The following is a partial summary of the conclusions from the fxempire.com weekly analysts’ meeting in which we share thoughts about what’s driving major global asset markets. The focus is on global stock indexes as these are the best barometer of overall risk appetite and what drives it, and thus of what’s moving forex, commodities, and bond markets.
It’s a quick summary of last week’s international stock market action and what drove it. It’s our starting point for our follow up articles on:
- Lessons For The Coming Week And Beyond
- Coming Week Top Market Movers
- Related fxempire.com weekly analysts
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MONDAY
Asia
Asian indexes continued where they (as well as the Europe and the US) left off Friday, falling hard [Japan -2.5%, Hong Kong -2.1%, China -1%, India -2%] on continued concerns about:
- A harder than expected China slowdown after the poor PMI data last Thursday (and 2 other developments see here for details – see Thursday section)
- Fears of higher US interest rates from Fed tapering that could force EM interest rates higher, and thus growth (and their financial markets) lower. See fxempire.com weekly analysts for a coming special report on what’s driving the emerging market sell – off and likely profit opportunities. Should be up within the next 4-24 hours.
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Ironically, unlike other Asian stock indexes, Japan’s Nikkei suffered from its currency’s strength, not weakness, as the JPY’s safe – haven status has driven it higher. That strength is bearish for Japan’s export-oriented stocks. The index was also pressured by news that Japan’s trade deficit had nearly doubled and hit a new record, due to a weakened Yen and rising energy imports.
The sell – off in Asia came despite news of a deal to prevent a precedent setting default of a major Chinese trust (see here for background and ramifications) suggests that markets anticipated a bailout. See fxempire.com weekly analysts for our post on lessons for the coming week, which includes details on China’s last minute avoidance of a systemic-risk default
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Europe
As in Asia, European indexes closed solidly lower due to continued risk – trade unwind stemming from concerns over China and emerging markets. It was their biggest single day drop in 7 months and it took them to a one month low, wiping out 2014’s gains, and overshadowing the bullish strong German Ifo business sentiment index result.
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US
US indexes finished lower, though a bit less so than those of Asia and Europe, with the continued unwind of long risk positions/short safe haven asset positions for the same reasons as overseas. US stocks opened higher after infrastructure bellwether Caterpillar (CAT) earnings beat estimates, but new homes sales printed below estimates. Momentum really turned when the largest S&P 500 sector, technology moved lower and ultimately sent sentiment bearish for the day. As in Europe, prevailing negative sentiment from last week outweighed some positive data like rising Dallas Fed mfg activity and US flash PMI beating forecasts.
