A strong rally for USD while global equities retreat sharply

Tuesday, March 10, 2015

Global equity markets came under renewed pressure in today’s session as ongoing concerns regarding the European QE programme and the strong rally in the USD weighed heavily on market sentiment and limited risk appetite.

The CAC, DAX, IBEX and London equity benchmark indices retreated between 0.8% and 2.05% while the euro sunk towards 1.07 trading near a 12-year low against the US dollar amid fresh Greek debt concerns. In today’s Euro-group meeting in Brussels, European finance ministers told Greece to stop wasting time and come down to the foundation of debt-reform measures.

The euro sinks below 1.07 against the dollar

EURUSD Curncy (EUR-USD X-RATE)  2015-03-10 16-14-16

In the US, the Dow Jones index plunged 250 points (-1.35%) while the S&P 500 and NASDAQ also retreated 1.4% and 1.45%, respectively, at the time of writing. Market participants remain cautious amid speculation of a sooner than expected increase of US interest rates following the recent robust US economic data. The USD index extended its upside momentum and surged to retest 98.50 against a basket of currencies.

USD index surges above 98.50

DXY Curncy (DOLLAR INDEX SPOT)   2015-03-10 16-12-45

The Dow Jones index posts sharp losses towards 17,700

INDU Index (Dow Jones Industrial 2015-03-10 16-15-31

Crude oil prices extended losses today as Brent front month futures retreated over 3% towards $56 per barrel and WTI futures fell towards $48.50 per barrel. The high levels of crude oil inventories and the strong USD currently weighs on market sentiment. In London, energy stocks were the main drag of the index lower as Royal Dutch Shell, BP, BG Group and Tullow Oil declined sharply between 3% and 6.5%. 

Base metal prices were all lower on the day. Copper reversed yesterday’s gains and retreated over 1.8% towards $5,750 and aluminium fell towards $1,750. Precious metals also remained in negative territory with gold trading lower towards $1,150/ounce. 

Copper declines sharply towards $5750

LMCADS03 Comdty (LME COPPER    3 2015-03-10 16-17-10

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