Here we go again

Click here to receive new analysis by email

Rude awakenings this morning

Many Asian traders went to bed last night with smiles on their faces only to wake this morning and be swarmed by a sea of red from a late session NY equities sell-down. Earlier on in the Asian trading day, major Indices here enjoyed fierce rebounds that were carried through to European stocks. Further, a late day PBOC move to cut rates and RRR added fuel to the ‘rebound’ fire with the DOW opening up close to 400 point, or almost 3%. By close though, all gains from the day’s earlier rebound vanished with the Dow, S&P 500 and Nasdaq ending sharply lower in the red. The common reason explained for this late day sell-down points to Asian markets today, in particular, on how Chinese stocks will react today to last night’s PBOC move. All of a sudden, China and the performance of the Chinese markets have now taken the lead in determining daily direction for trading in stocks worldwide. In cycling terminology, China Indices are now playing the role of the lead-out rider, while the other global equity markets are simply drafting in from behind the lead ‘rider’. Rate cut or not, the only certainty this morning is the even longer sheets of clients faced with margin calls. With the crippling 7% (approximate) consecutive plunges we have seen these past 2 days, getting clients to ‘top up’ margin accounts could be the huge challenge for brokers across Chinese cities this morning. A tall order that even the lowering of lending rates will not be of much help! What follows is the inevitable ‘closing out’ or forced selling – a daily event we are starting to become all too familiar with. With confidence in the markets completely shattered, the likelihood of buyers meeting these intermittent bouts of forced selling may just be few and far in-between.

IMPORTANT NOTE AND DISCLAIMERS

Market Opinions
Any opinion(s), news, research, analyses, prices, or other information contained on this website / document is provided as general market commentary and are from publicly available resources or otherwise obtained, and does not constitute investment advice nor does it seek to market, endorse, recommend or promote any investment or financial product. CMC Markets Singapore Pte Ltd. (Reg No./UEN: 200605050E) (“CMC Markets”) will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

Accuracy of Information
The content is subject to change at any time without notice, and is provided for the sole purpose of assisting traders to make independent investment decisions. CMC Markets has taken reasonable measures to ensure the accuracy of the information, however, does not guarantee its accuracy, and will not accept liability for any loss or damage. CMC offers no financial advisory services in any of the content or vouch for the veracity of any information.

Distribution
The content of this publication is not intended for distribution, or use by, any person in any country where such distribution or use would be contrary to local law or regulation. None of the services or products referred to or mentioned are available to persons residing in any country where the provision of such services or investments would be contrary to local law or regulation. It is the responsibility of the reader to ascertain the terms of and comply with any local law or regulation to which they are subject.

Third Parties
CMC Markets may provide you with opportunities to link to, or otherwise use, sites and services offered through or by third-party(ies). Your use of these third-party services is subject to such terms as posted by these third-party(ies). We have no control over any third-party site or service and we are not responsible for any changes to any third-party service or for the contents thereof, including, without limitation, any links that may be contained in or accessible through such third-party service. These links are provided solely as a convenience to you. You will need to make your own independent judgment regarding your interaction with these third-party sites or services. Our inclusion of advertisements for, or links to, a third-party site or service does not constitute an endorsement of any of the representations, products or services listed therein.

Important Note
Each reader/recipient agrees and acknowledges that: (a) no express undertaking is given and none can be implied as to the accuracy or completeness of this document; (b) this document does not constitute in any way a solicitation nor incentive to sell or buy any Shares, Stock Options and Contracts For Difference (CFDs) and similar and assimilated products; (c) each reader/recipient of this document acknowledges and agrees to the fact that, by its very nature, any investment in Shares, Stock Options, CFDs and similar and assimilated products is characterised by a certain degree of uncertainty; that consequently, any investment of this nature involves risks for which the reader/recipient is solely responsible and liable. It is to be noted that past performance is not necessarily indicative of future results. In this respect, past performance of a financial product do not guarantee any and are not an indication as to future performance; (d) the use and interpretation of this document require financial skill and judgement. Any utilisation whatsoever by the reader/recipient, relating to this document, as well as any decision which the reader/recipient may take regarding a possible purchase or sale of Shares, Stock Options, CFDs and similar and assimilated products, are the sole responsibility and liability of the reader/recipient who acknowledges and agrees to this as a condition precedent to and prior to any access to this document; (e) as a result of the above, all legal liability directly or indirectly arising whatsoever.