Following on from yesterday’s Hang Seng selloff, European indices have dropped between 1-2% on the day. US indies have posted more moderate declines but the Dow has been dropping into the close, finishing down over 100 points on the day indicating that the mood among traders remains sour. Technology stocks tried to regain their footing after Monday’s big takedown but results were mixed as Alibaba fell another 2.8% while Apple rallied 1.3%. There were lots of reasons bandied about for the weakness including moves to curtail corporate tax inversions, air strikes in Syria and mixed flash PMI data. Regardless of the noise of the day primary reason remains that stocks are exhausted, in a seasonally weak time of year and coming around to the idea that a more hawkish Fed which has driven USD higher, means that the liquidity party they have enjoyed for nearly two years is coming to an end. Japan returns to trading from holiday into a difficult time for bulls and may see some initial weakness as it catches up to the global retreat. Flash Japanese service PMI may, however impact markets as the day progresses. Markets in New Zealand, China and Australia may see some reaction to second tier data reports. Tomorrow in Europe and North America brings a flurry of smaller announcements with the most notable economic report being the German IFO survey. On the corporate side, Blackberry may attract attention with its big corporate event which is widely expected to be a new product launch. Shares fell 4.3% ahead of the event suggesting cooler enthusiasm than the previous launch over eighteen months ago. Economic News Significant announcements released overnight include: US house prices 0.1% vs street 0.5% US flash manufacturing PMI 57.9 vs street 58.0 US Richmond Fed 14 vs street 10 vs previous 12 Canada retail sales (0.1%) vs street 0.5% vs previous 1.1% Canada retail ex auto (0.6%) vs street 0.0% vs previous 1.5% France flash manufacturing PMI 48.8 vs street 47.0 France flash service PMI 49.4 vs street 50.1 Germany flash manufacturing PMI 50.3 vs street 51.2 Germany flash service PMI 55.4 vs street 54.6 Eurozone flash manufacturing PMI 50.5 vs street 50.6 Eurozone flash service PMI 52.8 vs street 53.0 Upcoming significant announcements include: 8:45 am AEST NZ trade balance street $1,125M vs previous $692M 10:00 am AEST Australia leading index previous 0.4% 11:35 am AEST Japan flash manufacturing PMI previous 52.2 11:45 am AEST China consumer sentiment previous 113.3 8:00 am BST Sweden consumer confidence street 98.0 vs previous 96.9 8:00 am BST Sweden manufacturing conf street 103.5 vs previous 106.7 9:00 am BST Norway unemployment rate street 3.0% 9:00 am BST Germany IFO bus climate street 105.8 9:00 am BST Germany IFO current street 110.2 9:00 am BST Germany IFO expectations street 101.2 9:00 am BST Italy consumer confidence street 101.0 10:00 am EDT US new home sales street 430K 10:30 am EDT US crude oil inventories street 1.0 mmbbls FOMC members Mester and Evans along speaking during the day.
Exhausted stocks continue to retreat
20:00, 22 September 2014