Weak US economic data sets a bearish tone across equity markets

Wednesday, January 14, 2015

Weak US economic data and disappointing US corporate earnings results set a bearish tone across the global equity markets. At the time of writing, the Dow Jones index retreated over 200 points (-1.15%) towards 17,400, while the DAX, CAC, IBEX and London equity benchmark index plunged between 0.5% and 1.95% in today’s trading session.

Dow Jones index

INDU Index (Dow Jones Industrial 2015-01-14 16-06-06

US retail sales declined sharply 0.9% m/m in December against analysts’ estimates of a modest 0.1% drop. In addition, the import price index fell by -2.7% in December compared to a 1.5% decline in November and business inventories increased 0.2% versus estimates of a 0.3% rise. The USD index slid slightly lower from recent high levels but remained fairly strong hovering around 92.0 against a basket of currencies.

The USD index holds around 92.0 

DXY Curncy (DOLLAR INDEX SPOT)   2015-01-14 16-07-36

The political uncertainty in Greece continues to weigh on market sentiment, adding further pressure to the euro which fluctuated strongly in today’s session but remained under 1.18 against the US dollar.

Precious metal prices fluctuated strongly today. Gold rebounded from yesterday’s losses and climbed higher to breach $1,240/ounce. On the other hand, silver retreated sharply and tested a low at $16.50 in early trade but has slightly rebounded trading back to $17.00.

XAU - Gold spot 

XAU Curncy (Gold Spot   $_Oz )  D 2015-01-14 16-09-59  

Base metal prices came under further pressure this afternoon as copper plunged over 5% to test a low at $5353. Lead, nickel and zinc posted sharp losses following the downtrend.                       

The main focus will turn to the release of the US Federal Reserve Beige Book details this evening, which could provide further insight regarding the current US economic conditions and prospects. 

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