US markets resume declines after Monday's bounce

Wednesday, May 07, 2014

US markets headed lower, erasing Monday’s gains as tech stocks sold off. After a brief respite at the start of the week, both the S&P 500 and DJIA erased those gains despite the US trade deficit narrowing slightly in March to -$40.4bn from a revised figure of -$41.9bn the previous month. The dollar index fell to its lowest level since October yesterday, losing 0.52% against a basket of currencies as notable improvements in the euro, sterling and yen against the dollar piled on the pressure. Higher treasury yields failed to materialise in the wake of last week’s encouraging non-farm payrolls, disappointing dollar bulls.  

Asian equity markets extended the sell-off overnight with Japanese equity markets posting substantial losses as investors sold off tech stocks. Japanese investors returning to markets after the long weekend sent both the Nikkei and TOPIX sharply lower from the open, shedding 2.93% and 2.58% respectively. A firmer yen, strengthening for the fourth consecutive session during overnight trading, intensified the pullback in benchmark indices. The currency traded towards 101.50 early on this morning, strengthening 1.5% against the dollar over the past few sessions after briefly touching levels above 103.00 last Friday.

Chinese markets pared recent gains on weaker services data as the Shanghai Composite snapped a four day bull run to close over half a percent lower. The HSBC services PMI reading fell slightly in April to 51.4 from 51.9 the previous month and despite holding above the key 50 point level which separates expansion from contraction, unlike its manufacturing PMI counterpart, jittery investors opted to take short term gains off the table as fears of prevailing headwinds dominated sentiment. Concerns over the weakening property market and mounting provincial debt persist, with a continued slowdown in economic growth only aggravating the situation.

Dollar index heads lower 

DXY Curncy DOLLAR INDEX SPOT 2014 05 07 07 44 01

JPY strenghtens against the dollar, passing 101.50

JPY Curncy Japanese Yen Spot 2014 05 07 07 25 40

HSBC Chinese services PMI falters m/m to 51.4 in April...

MPMICNSA Index HSBC China Servi 2014 05 07 07 32 22

...snapping a four session winning streak in the Shanghai Composite

SHCOMP Index Shanghai Stock Exc 2014 05 07 07 31 54


Events for today

0700

DE

Mar

Industrial Orders

1330

US

Q1

NF Prod. & Labour Costs

1530

US

w/e

EIA Energy Stocks

2000

US

Mar

Consumer Credit

Topics: Equities, PMI, JPY, DXY
More from: Kash Kamal