Weaker corporate earnings prompt sell-off in US equities

Friday, January 24, 2014

US equity markets tumbled after a string of weaker than expected earnings releases and a surprise contraction in China’s flash manufacturing PMI reading. Industrials, basic materials and financials were among the worst performing sub-sectors in both the S&P 500 and DJIA as investors are increasingly struggling to justify current stock market values. The DJIA closed lower for the third consecutive session, losing 1.07% and closing at its lowest level in five weeks while the S&P 500 snapped a two day winning streak as it shed 0.89% off its value.

Asian markets struggled with direction during overnight trading as Japanese equity markets dropped sharply lower, following a bearish session on Wall Street while Chinese markets rallied higher on easing money market concerns. Both the Nikkei and TOPIX opened on the back foot and spent the entire session in negative territory after a string of bearish corporate earnings announcements in the US weakened the dollar against the yen, causing exporters to retreat as they closed down 1.94% and 1.78% respectively. Meanwhile, Chinese markets were encouraged by continued PBOC intervention which has seen money market rates decline steadily from 6.6% at the start of the week towards 4.75% at the time of writing.  

Platinum prices have traded with increasing volatility as talks between union officials and producers fail to make significant progress. Prices seem reluctant to move above resistance at $1,470 with yesterday’s session seeing prices close $1.50 lower after trading within a $29 range between $1,441 and $1,470. According to Bloomberg data, at least 70,000 employees are participating in the strike costing an estimated $13.1 million in lost revenue on the first day alone.   

Recent yen strength against the dollar hurts exporters 

JPY Curncy Japanese Yen Spot 2014 01 24 07 42 37

Chinese 7 day repo rates decline as PBOC intervenes

RP07 Index CHINA INTERBANK REPO 2014 01 24 07 27 39

Platinum prices have rallied 6.5% since the start of the month

XPT Curncy Platinum Spot Oz 2014 01 24 07 19 36


Events for today: Friday, 24 January 2014

1530

US

w/e

EIA Nat Gas

OE:

Feb Heating Oil, RBOB (NYMEX)

Feb Natural Gas (NYMEX)

Feb Copper, Gold, Silver (COMEX)

View Economic Market Calendar

Topics: Equities, JPY, Platinum
More from: Kash Kamal