Market turmoil continues

Thursday, October 16, 2014

Global markets continued their precipitous downward slide today as a combination of factors ensured the perfect storm that has been brewing since the start of the week continued to rage on in full force. European stocks tried desperately to cling on to their opening levels early on but failed to stem the outflow as major benchmark indices across the region posted substantial losses towards the latter half of the session.

Risk averse investors were struggling to find anywhere to park their wealth with money market funds seeing significant inflows despite the near zero yields on many owing to the record low lending rates pushed by central banks in recent times. Worries regarding the political stability in Greece and its already fragile bailout plan combined with the slowing growth outlook across the eurozone after weaker than expected macro data painted a pessimistic picture for Germany’s economic outlook have seen a protracted sell-off across the majority of risk assets. Adding further pressure to this has been weaker than expected US macro data which caught many investors off guard after a weaker than expected Empire manufacturing index and September retail sales stood in stark contrast to a few months ago when the outlook was a lot more optimistic to say the least.

The threat of a possible Ebola crisis in the West added further fuel to the flames and with jittery investors already on edge it seems the combination of all the above factors could see the global sell-off continue on Friday and potentially into the coming week as investors struggle to find anything positive. At the time of writing, both the S&P 500 and DJIA were trailing lower despite a glimmer of hope from better than expected initial jobless claims, which dropped to 264K from 287K the previous week. Industrial production in September also provided some respite from the doom and gloom outlook, increasing 1.0% m/m against expectations of a 0.4% increase, but even this wasn’t enough to divert attention away from the overall market sell-off.

S&P 500 continues its precipitous slide...

SPX Index SP 500 Index Daily 2014 10 16 15 11 39

...despite better than expected initial jobless claims

INJCJC Index US Initial Jobless 2014 10 16 15 11 09

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