IFC Markets - Analytics

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    Markets tumble as investors take profits on bearish news

    US stocks tumbled on Wednesday as investors sold off technology and biotech stocks amid worries about expected low earnings in first-quarter earnings season. Profits are forecast to decline for the first time since 2009, and investors booked gains with stocks trading at historically high valuations - the S&P 500 trades at 18.36 times earnings, compared with a trailing five-year average of 15.64 times . The S&P 500 fell 1.5%, declining for three consecutive days with nine out of its ten main sectors finishing sharply lower. Energy sector stocks closed higher as oil prices rebounded after fighting in Yemen intensified. Nasdaq Composite plunged 2.4%, recording the steepest decline since April 2014, while the Dow Jones Industrial Average lost 1.6% and turned negative for the year. Orders for durable goods unexpectedly dropped in February for a sixth straight month, indicating that businesses are reluctant to invest, and first-quarter GDP will be weak. The dollar traded lower against major currencies. Today at 13:30 CET Initial Jobless Claims and Continuing Claims will be released in US. The tentative outlook is positive. At 14:00 CET FOMC member Lockhart will speak on economic outlook and monetary policy in Detroit. And at 14:45 CET advance Services PMI for March will be released. The tentative outlook is negative.

    S&P 500 stock market index

    European stocks fell on Wednesday as euro continued strengthening against the dollar. The Stoxx Europe 600 dropped 1.1%, with only the energy sector advancing. Greece failed to secure a quick cash payment from the euro zone rescue fund. Germany’s DAX 30 lost 1.2% despite the Ifo institute’s better than expected report on business sentiment. The DAX 30 has surged 21% this year helped by depreciating euro since the launch of the European Central Bank’s asset-purchase program worth 1.1 trillion euros ($1.21 trillion). Stronger euro negatively impacts exporters as it makes euro-zone goods more expensive for overseas consumers. German Consumer Confidence index for April came in today outperforming expectations. No important economic data are expected in euro-zone today. At 10:30 CET Retail Sales will be released in UK. The tentative outlook is positive for the Pound.

    Nikkei dropped today as investors followed the Wall Street’s lead and sold off semiconductor and hi-tech shares. It is worth noting that Nikkei has recorded 11 percent gains this quarter supported by stock purchases of public pension funds, such as the Government Pension Investment Fund, and weaker yen. Investors expect the wage rises that Japanese blue chip companies announced last week will also underpin the market by boosting domestic consumption, as early data showed an average hike of 3,013 yen in base salaries per month, roughly 75 percent bigger than last year's increase.

    Oil prices surged on Wednesday as concerns about oil shipments in Middle East came to forefront with Western-backed Yemen President fleeing the southern city of Aden after militants came closer to seizing the city. Also, expectations that a deal over Iran’s nuclear program will not be reached this week and the dollar’s recent weakness provided additional support to oil prices.

    Gold prices rose for the sixth consecutive day after weaker than expected durable goods orders in US indicated lower likelihood of interest rate hike in near term.

    Copper prices fell on lower demand concerns after disappointing US orders for durable goods. Copper May futures price has dropped 7.1 percent in the past 12 months amid signs of slower economic growth in China.

    Copper price

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