A weaker dollar and a sharp sell-off in global equity markets

Wednesday, March 25, 2015

It has been a very volatile trading session for global equity and commodity markets. Despite the recent US dollar weakness, disappointing US economic data weighed on market sentiment and dragged US and European equity markets lower. Durable goods orders fell unexpectedly by -1.4% in February against analysts’ expectations of a 0.2% rise, while German IFO business climate data was fairly in-line with analysts’ estimates.  

EURUSD climbs higher towards 1.10

EURUSD Curncy (EUR-USD X-RATE)   2015-03-25 16-08-59

In Europe, the CAC, DAX, IBEX and the Italian equity benchmark indices retreated sharply between 0.7% and 1.3%. In the US, the Dow Jones extended declines falling over 150 points towards 17,850 (-0.90%), while the S&P 500 and NASDAQ retreated 0.65% and 1.4%, respectively, at the time of writing.

Dow Jones retreats over 150 points at the time of writing following weaker USD

INDU Index (Dow Jones Industrial 2015-03-25 16-10-28

The USD index slid lower towards 96.50 against a basket of currencies and offered some support to crude oil prices. The weekly DOE inventories report spread a bearish tone after showing a large increase of 8.17 million barrels in crude oil inventories versus estimates of a 4.9 million barrel build. Distillate stocks were fairly unchanged and gasoline inventories dropped by 2.0 million barrels. WTI front month futures fluctuated strongly hitting a high at $48.37 and a low at $47.00 but managed to remain in positive territory.

WTI front month futures fluctuated strongly but held above $48/barrel

CL1 Comdty (Generic 1st 'CL' Fut 2015-03-25 16-11-20

Gold surged higher as risk appetite was limited in the global equity markets and tested the key area of $1,200. Silver also rallied above $17 and platinum and palladium extended gains in today’s session.    

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