A number of factors have come together to knock stock markets in Europe and north America lower today following a positive day for Asia Pacific markets.
I’ve been writing a lot lately about how the way traders approach economic developments has changed. In the past, the street had cheered weak economic news anticipating central bank stimulus would give a liquidity boost to stock markets. Now, however, traders have started to view dovish talk as a sign of economic weakness and that current stimulus measures like QE may not be as effective as they were in the past.
With Europe still struggling there has been more speculation that ECB President Draghi could go even more dovish when he speaks tomorrow. This possibility has sent major continental indices down over 3% today with the FTSE
down 2.4% and US indices down 1.5-2.0% on the day.
Specific sectors have come under pressure as well. Volkswagen’s growing scandal has sent its stock lower on the day and also has spilled over to other automakers. Meanwhile in the US, biotech stocks could be active for a second straight day as presidential candidate Clinton is expected to announce plans for what she considers to be price gouging from drug companies. The sector tumbled yesterday when she indicated plans to make an announcement.
Volkswagen rumours flying company to issue a profit warning and put aside €6.5B for costs of emissions scandal. More investigations likely in South Korea and Europe. Company shot down rumours its CEO was about to be replaced
Significant announcements released overnight include:
Australia Q2 house prices street 8.0% vs previous 6.9%
UK CBI total orders street 0
UK CBI selling prices street (5)
Turkey interest rate 10.75% no change expected
Hungary interest rate 1.35% no change expected
Upcoming significant announcements include:
9:00 am EDT US consumer confidence street 0.4%
10:00 am EDT US Richmond Fed street 2
6:30 pm EDT US Atlanta Fed President Lockhart speaking
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