In the final hour of trading U.S. equities pared some of the losses they had posted in the course of the day, but still finished in negative territory. The Dow posted its third day of triple-digit loss, pulled lower by the growing concerns among investors about the Eurozone’s debt problems. U.S. stocks were propelled higher in the final part of yesterday’s session as the Wall Street Journal reported that the Fed is likely to undertake further actions to spur growth in the world’s largest economy. The Dow Jones Industrial Average plunged 104.14 points, or 0.82%, to finish the session at 12617.32, weighed by Cisco and AT&T. The Dow traded with a loss of nearly 200 points earlier in the day. The S&P 500 slipped 12.21 points, or 0.90%, to close at 1,338.31. At the same time the NASDAQ declined 27.16 points, or 0.94%, to end at 2,862.99. The CBOE Volatility Index, considered by many as the best indicator of fear in the market, rose almost 10% to finish above 20. All key S&P sectors finished the session in the red, pulled lower by telecoms and materials. The government auctioned $35 billion worth of two-year notes at a relatively high yield of 0.220% and bid-to-cover of 4.00. The yield on the ten-year Treasury bond traded at a record low of 1.394%. On the economic front, the flash manufacturing PMI declined more than analysts were expecting. At the same time, home prices climbed for the month of April, while logging a 3.7% gain on a year-over-year basis.
Asian equities slipped on Wednesday as the rising yields on the Spanish government bonds renewed concerns among investors that Spain will need further bailout, while at the same time Greece will probably fail to adhere to the terms of its financial aid package. The FTSE CNBC Asia 100 Index, which tracks the performance of markets across Asia, fell 0.8%. Japan’s Nikkei share average declined 1.4% to its lowest close in seven weeks after Apple announced results that disappointed investors while printer makers slid after Lexmark International lowered its outlook. The Japanese benchmark dropped 122.19 points to trade at 8,365.90, inching closer to its June 4th low of 8,238.96. The blue chip index has dropped 7% for the month to date, and is 1% lower for the year. The broader Topix slipped 1.6% to trade at 706.46. Trading volume was the highest in the past two weeks, with 1.78 billion shares changing hands, compared to the 1.64 billion shares traded on Tuesday and the 1.41 billion traded on Monday. South Korean stocks declined to their lowest closing level in seven months, as the news, coming from Spain, didn’t look encouraging and the earnings from several U.S. blue chip firms disappointed. The Korea Composite Stock Price Index (KOSPI) declined 1.4% to finish the session at 1,769.31 points. Australian stocks dipped 0.2% after lower-than-expected inflation numbers had an offsetting effect over the growing worries for the Eurozone. The Australian Bureau of Statistics announced that the Consumer Price Index (CPI) climbed 0.5% in the June quarter, but it still remains well below the range of between 2% to 3% set by the country’s central bank. The benchmark S&P/ASX 200 index lost 9.3 points to 4,123.9. In New Zealand, the benchmark NZX 50 index dipped 0.05% to 3,459.0 points at the end of the session. Shanghai stocks ended at their lowest level since March 2009, with property developers suffering big losses as Beijing announced it may increase transaction fees and taxes for sales of existing homes in an attempt to stop speculation in the market. The Shanghai Composite finished 0.5% lower, at 2,136.2. The CSI300 Index of the biggest Shanghai and Shenzhen companies finished 0.7% lower. Hong Kong equities are looking set for their third consecutive day, weighed down by local conglomerate Hutchison Whampoa after a group of companies it controls is expected to acquire a UK gas company. The Hang Seng Index declined 0.3% to 18,844.2 points after bouncing back from the lows it had posted earlier on. The China Enterprises Index of the biggest Chinese companies in Hong Kong slipped 0.2%. In India, the benchmark BSE Index lost 0.8% to 16,778.7 points. At the same time the NSE Index dropped 0.5% to 5,101.
European equities declined in the early trading hours on Wednesday, posting their fourth consecutive day of declines amid growing concerns that Spain will require more financial help and after Apple announced earnings, which disappointed market participants. The FTSEurofirst 300 index of biggest European companies moved 0.1% lower to 1,017.30 points. Spain’s benchmark IBEX index was the best performer, paring some of the losses it had posted in the previous couple of sessions, but the index still remains deep into red territory for the year. Tech stocks were hit hard after Apple’s results disappointed, with Nokia erasing 1.2% and Infineon sliding 1.1%. The Stoxx Europe 600 index declined 0.1% to trade at 250.46. The benchmark index has closed lower for three consecutive days on growing worries among investors that Spain will need more stimulus measures to handle its indebtedness. The DAX 30 index was also among the losers, slipping 0.1% to 6,381.86. The U.K. stocks traded lower, weighed by disappointing earnings reports. BT Group PLC plunged 4.9%, as fiscal first-quarter sales declined and missed economists’ expectations. London’s FTSE 100 index slid 0.2% to 5,489.89. In France, the CAC 40 index added 0.1% to trade at 3,076.50, propelled higher by the 5.3% gain of Peugeot SA. The car making company announced plans to raise 1.5 billion euros ($1.81 billion), as it posted a loss in the first half of the year.
As we mentioned above the Dow moved lower yesterday, but the index had a pretty decent gain in the second half of the session. The benchmark started the day just below its 200-period moving average and trended lower for the better part of the day. The blue chip index touched lows of 12,520.61 before bouncing back to close at 12,617.32. Today the futures are indicating a lower open, but there are several economic announcements that will be released later on and might have some effect on the stocks market. Support in the Dow Jones is provided by the lows around 12,500, which we touched in the end of June. Resistance, on the other hand, stands at the 200-period moving average around 12,720.14. Oscillators are all trending lower with the relative strength index at 37 and the stochastic already in oversold territory, standing at 15. The MACD has just pushed below the key 0 level after retracting from the highs it touched last week.
Yesterday gold moved into the red in the early hours of the session, but after touching lows of 1572 it bounced back and rallied for the rest of the day. The bullion pushed above its 25-period moving average and even tried to break the resistance at the 50-period moving average, but, after several failed attempts, it closed around 1580.61. Today gold continues moving higher and it is currently changing hands at 1588.20, just off of the session highs. Support in the precious metal is provided by the 50-period moving average, which is standing around 1582.49, while resistance stands at the 200-period moving average around 1592. Oscillators are all trending higher with the relative strength index around 60 and the stochastic already in overbought territory, standing at 91. The MACD continues to move in a tight range, but it edged slightly higher towards the key 0 level.
The currency pair slipped in the early hours of yesterday’s session, but after that it traded in a tight range for the rest of the day. The bears tried to push below the key 78.00 level, but the bulls held their ground. The demand for the Japanese currency continued to be strong as indicated by the inability of the USD/JPY to push decisively above 78.20. Today the currency pair is posting modest gains, currently trading at 78.23. The advances came in a response to the slight improvement of sentiment among investors. Support, as we already mentioned, stands at the psychologically important 78.00 level, while resistance is provided by the 25-period moving average around 78.34. Oscillators are moving in mid-range with the relative strength index at 41 and the stochastic at 50. The MACD is inching slightly higher, issuing buy signals which are yet to be confirmed by other technical indicators.
The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.