A terrible day for stocks across the world shook investor confidence as the dollar made strong gains across the board.
Despite little discernible fundamental data, some disappointing earnings results from US firms caused the Dow Jones to fall to its lowest point since June. Equities across Europe felt similarly shaken as the recently buoyant mood quickly vanished.
Staying very range bound until markets in the US opened, the dollar quickly climbed as the poor earnings were released. Mirroring the dollar and reversing several days of declines, the yen strengthened as its status as a net exporter caused investors to return to the safe haven.
Though not amongst the biggest casualties for the day, the euro and sterling both suffered as a result of the crisis in confidence. The euro also fell against sterling as the single currency was deemed to be more risky.
This euro uncertainty was compounded as news that Moody’s branded five Spanish regions as ‘junk’. A previous downgrade for the Mediterranean nation had resulted in a strengthening for the currency, however it appears that assurances in the US economy are a precondition for any investor optimism.
Today’s Key Announcements:
- 02.45am – CNY – Flash Manufacturing PMI: slight contraction but well above estimates
- 08.30am – EUR – German Ifo Business Climate: expected increase
- 09.00am – EUR – Flash Manufacturing PMI: an improving contraction expected
- 09.00am – EUR – Flash Services PMI: expected return to slight growth
- 11.00am – GBP – BCI Industrial Order Expectations
- Tentative – EUR – German 10y Bond Auction
- 12.45pm – EUR – Draghi to speak
- 14.00pm – USD – Flash Manufacturing PMI
- 15.00pm – USD – New Home Sales: expected increase
- 19.15pm – USD – FOMC Statement
See previous Daily Market Reports