Forex Marketz Daily Forex News – Fully Markets Update
What a horrible day for those of us who love growth in global equity markets. Right? OR Was it was just one of those days, where nothing went right. It was a day that saw declining stocks beat out advancing stocks by 5 to 1 on the New York Stock Exchange (NYSE). It was just one of those days in which the market was worse than what was indicated by the indices.
What headlined the global move lower in equity markets? It is the weakness we are seeing in the commodity universe. Gasoline was down 2.2 percent, WTI Crude was lower by 1.2 percent. We have weakness in metals as well as copper is off by 1.7 percent and nickel futures are extremely weak and down a whopping 4.2 percent. This means iron ore stocks are weak. Companies like BHP Billiton, Ltd. (BHP: NYSE) took big hits on the day.
When this happens, shipping companies also trade lower. Companies like Frontline, Ltd. (FRO: NYSE) which plummeted over seven percent yesterday. Another shipping company which saw losses was Eagle Bulk Shipping (EGLE: Nasdaq) which plummeted over nine percent at one point to close trading just over five percent lower.
All of this meant a weak day for stock indices.
Emerging markets were not immune to yesterday’s weakness. The iShares Brazil ETF lost three percent. iShares South Africa ETF also lost three percent. Many of the other ETF indices were lower by one to three percent on the day.
Even social media and internet stocks lost ground. Alibaba (BABA: NYSE) fell over four percent in trading yesterday. So why are we so jittery here? There is not much reason to panic. Lou Jiwei, China’s minister of Finance, who was speaking at the G20 implied we should not expect any major stimulus emerging from China anytime soon. It turned out, we should not worry as today’s flash PMI data was encouraging.
So why the selloff? It’s a bump in the road. We have the third quarter earnings season right around the corner and things look pretty good there. Corporate estimates are looking at nearly six percent growth in earnings which will match what we saw in the second quarter. The fact was, we saw ten percent growth then. This was another record in corporate earnings growth.
There is absolutely no indicators to suggest we are about to see a major stock selloff. We will probably continue to consolidate around the key technical level of 2,000 in the S&P 500 and the DJIA is likely to continue inching higher as well. Why? There is no inflation. There is no huge economic growth. There are no signs of worry from the Federal Reserve (Fed) and let’s face it the Fed scares the equity markets more than anything. Especially when the sense inflation. Is there any inflation, which indicates strong growth, to worry them? No.
There is no reason to panic yet. In the next few days, the buyers will return and equity indices should resume their climbs.
