Markets rebound after sharp sell-off

Wednesday, April 09, 2014

US equity markets stemmed the outflow yesterday as investors took advantage of buying opportunities at the lower levels, particularly in the tech sector which has seen heavy selling pressure in recent sessions. Markets were buoyed by a weaker dollar index which dropped for the third straight session, dropping 0.6% yesterday to a three week low. Investors will be paying close attention to US wholesale inventories data as well as EIA crude stocks which are both due out later this afternoon for further insight into the demand outlook. However, market activity may remain subdued ahead of the Fed budget and release of its March 18-19 meeting minutes.

DXY drops towards 79.800, supporting rebound in equity markets 

DXY Curncy DOLLAR INDEX SPOT 2014 04 09 07 25 10

Japanese markets faced a heavy sell-off during overnight trading as hopes of stimulus faded. Both the Nikkei and TOPIX closed significantly lower for the third straight session, erasing 2.1% and 2.05% respectively as comments from BOJ governor Kuroda signalled further stimulus would not be needed. Governor Kuroda stated that the long awaited increase in sales tax would likely see economic growth dampened in Q2 before rebounding in summer, and with inflation expectations progressing towards the 2% target additional measures were unlikely to be needed. The comments saw the yen rally sharply towards 101.55 against the dollar yesterday as it shed 1.25% throughout the day on renewed confidence.

JPY pushes towards 102.00 against the dollar

JPY Curncy Japanese Yen Spot 2014 04 09 07 37 27

Yen strength and fading stimulus hopes see Nikkei extend losses

NKY Index Nikkei 225 2014 04 09 07 32 02


Earnings season kicked off with Alcoa’s results after markets closed yesterday, with the aluminium producer posting better than expected Q1 earnings despite missing its revenue target. Persistently weak prices have prompted producers to shutter inefficient smelting capacity and the New York based company expects a global supply deficit of 730,000 tonnes in 2014, revising its January forecast of a 106,000 tonne surplus.

 

Events for today

0700

DE

Feb

Trade Bal

0930

UK

Feb

Trade Bal & Non EU

1500

US

Feb

Wholesale Inventories

1530

US

w/e

EIA Energy Stocks

All times UK Local Time

 

Topics: Aluminium, JPY, DXY
More from: Kash Kamal