Markets on standby ahead of FOMC meeting

Tuesday, January 28, 2014

US equity markets sank lower on Monday as the S&P 500 closed lower for the third consecutive session after losing 0.49% throughout the session on mounting concerns regarding the Fed’s withdrawal of QE. The index has slipped 3.3% over the past few sessions as it closed slightly above 1,780 after dropping from record highs above 1,850 in early January. The recent rout in US equity markets has caused the VIX to spike above 18 for the first time since mid-October last year as investors struggle to justify current stock market valuations off the back of Chinese economic growth and US tapering concerns. The DJIA was also under pressure throughout the day as it lost 0.26% and closed lower for the fifth straight session as the index looked to test the 100 day MA level of support at 15,755 in the coming sessions.

Asian market sentiment largely followed Wall Street lower as Japanese equities dropped for the fourth consecutive session while Chinese equity indices ticked slightly higher despite the lack of fresh economic data releases for the region. Both the Nikkei and TOPIX struggled to hold on to early gains as they closed 0.17% and 0.4% respectively lower while the Shanghai Composite and CSI 300 managed to add 0.26% and 0.18%. Activity was relatively quiet throughout the session as investors opted to sit on the side-lines ahead of the FOMC meeting, due to start today.

Gold prices pulled back yesterday after intraday price moves tested resistance at the 100 day MA towards $1,275 after prices rallied 2.87% over the past two sessions. Prices have rallied 5.9% since the start of the year as physical buying from Asia strengthens and speculators increase their bullish bets on the yellow metal. After a precipitous decline throughout 2013 which saw total known ETF holdings of gold fall by 32%, holdings have held steady above 55m ounces throughout January on growing emerging market concerns.

VIX spikes above 18 as S&P 500 closes lower for the third consecutive session

 SPX Index SP 500 Index SPVIX 2014 01 28 07 37 07

Gold prices pull back from recent highs while total known ETF holdings halt decline

ETFGTOTL Index Total Known ETF 2014 01 28 08 18 47


Events for today: Tuesday, 28 January 2014

0500

US

Jan

Building Permit

0930

UK

Q4

GDP

1330

US

Dec

Durable Gds & New Orders

1500

US

Jan

Richmond Fed

1500

US

Jan

Consumer Confidence

1530

US

Jan

Dallas Fed

  View Economic Market Calendar

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