Global equity markets' sell-off deepens

Friday, October 10, 2014

European equity markets plunged sharply today to finish the week on the negative side following the recent disappointing economic data, which hurt market sentiment. The big surprise came from the German economy after yesterday’s large decline in German exports weighed heavily on sentiment with the DAX index retreating 216.2 points or 2.4% towards 8,780 points.

DAX Index

DAX Index (Deutsche Boerse AG Ge 2014-10-10 17-07-00

The CAC, IBEX and London equity benchmark followed the downtrend and slid lower today between 1.2% and 1.65%. The euro gave back this week’s gains and declined sharply to retest 1.2610 in today’s session. 

EURUSD Spot

EURUSD Curncy (EUR-USD X-RATE)   2014-10-10 17-07-19

On the macroeconomic front, weak European economic data continue to dominate the equity and commodity markets. France’s manufacturing production fell by 0.2% in August, while the country’s industrial production remained flat at 0.0% in August compared to a 0.2% rise in July. Italy’s industrial production increased 0.3% in August, missing expectations of a 0.5% rise. In the UK, construction output fell sharply by 3.9% in August against analysts’ estimates of a 0.5% increase.

At the time of writing, US equity indices remained under pressure, extending heavy losses. The Dow Jones has been consolidating around 16,700 setting for its lowest level in 8 weeks, since mid-August 2014.  

Dow Jones Index weekly chart

DJI Index (Dow Jones Industrial  2014-10-10 17-09-01

Brent futures remained under heavy pressure today after trading below $90 per barrel for the first time since June 2012. It should be noted that Brent front month futures have retreated sharply more than $15 in four months. Base metal prices plunged in today’s session, with Lead and Nickel retreating more than 1% after the recent poor macroeconomic indicators. Copper extended losses heading towards 6,670, while aluminium fell towards 1,930.  

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