Stock markets have continued to plunge overnight with the exhausted and overextended bull market starting to collapse like a house of cards. The Hang Seng fell 2.0% overnight while Australia fell 1.1%. This morning the Dax is down 0.3% while the FTSE and CAC are both down 1.1%. US index futures are down 0.2% while the Nikkei was flat.
While it was tensions between the US and North Korea that finally jolted markets out of their summer slumber, heading toward the end of the week the focus has turned back to later earnings reports. Yesterday, Macy’s plunged 10% despite beating the street on earnings as traders focused on negative same store sales even though they weren’t as bad as expected. US retailers remain in the spotlight with Nordstrom beating by a penny and JC Penney reporting Friday morning.
Traders reacted negatively to tonight’s technology earnings. Snap tumbled 12% in aftermarket trading after sales and active users came in below expectations. Nvidia fell 6% initially so far despite posting better than expected earnings.
With markets moving into what has historically been the weakest and most volatile time of the year for stocks, traders suddenly remembering the concept of risk have been moving capital out of risk markets, viewing news like earnings as an opportunity to close out long positions and have been increasingly sending capital back into defensive havens. Gold and the Japanese Yen have continued to advance overnight, building on recent breakouts. GBP remains under pressure following yesterday’s soft UK economic numbers.
Crude oil is coming off a volatile day that appears to have been more technically driven than news driven. With traders exiting risk markets, WTI’s test of the $50.00 round number sparked a wave of selling/profit-taking that knocked it back over 2% down toward $48.50. Overnight WTI has dropped another 0.8% toward $48.20.
Oil may attract attention again this afternoon around the Baker Hughes drill rig count. Oilfield exploration activity usually ramps up in the summer but there have been rumblings of slowing demand and budget cuts. Last week the rig count fell and a repeat could cut into expectations of US production growth.
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