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'Bad news is good news' no longer

'Bad news is good news' no longer

DJIA (Close 8/10): 16 659.25, (-1.97%) S&P 500 (Close 8/10): 1968.87, (-2.07%) STI (Close 8/10): 3227.71, (1.01%) EUR/USD (price at 8am SGT): 1.2688(Change since 9/10/14 6pm SGT -0.54%) AUD/USD(price at 8am SGT): 0.8764 (Change since 9/10/14 6pm SGT -1.26%) USD /JPY (price at 8am SGT): 107.83(Change since 9/10/14 6pm SGT + 0.10%) There was a stark reminder overnight that bad news is no longer good news. Some investors took a flight to safety over global growth concerns and the Fed’s talk of caution over growth. FOMC non-voter Lacker highlighted a change in the consumer mindset since the GFC, that consumers are now more cautious about spending, having experienced sudden losses in income. The S&P 500 and Dow clocked steep losses of 2% overnight, undoing gains from the day before, while they see-saw through their most volatile stretch since 2011. The energy sector bore the brunt with losses of 3.7%, while all ten sectors fell.


A pick up in volatility underlines nerves in the markets, with the VIX up 25% to 18.88. Elsewhere, there show of weakness in Europe continued, with German exports falling by 5.8%. The filing of bankruptcy for Portugal’s Banco Espirito Santo sent further jitters into markets, further underlining the instability of the European banking system. The news that China plans to increase tariffs on imported coal took effect on Australian markets today with miners taking a hit. The Australian ASX followed US markets lower this morning, while the STI and Hang Seng are likely to follow suit when they open at 9am. The key focus will be on energy sectors in the Asian markets this morning after Brent oil plummeted more than 3% below the key levels of $90 overnight on supply overhang fears.

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