Local stockmarkets are heading for another pounding today after markets in Europe and the US sold off sharply, and the price of iron ore again fell overnight and this morning.
The share futures contract had our market down more than 50 points at the start, and it wouldn’t surprise if the major indices fall further in reaction to what was really a hard to explain outbreak of weakness offshore.
Wall Street saw its third triple digit loss for the Dow this week, with equally large falls for the S&P 500 and the Nasdaq.
And the reasons were myriad and none, without one being picked as the trigger.
But in Australia were had no shortage of triggers for what looks like being a rough day – the big falls in the US and Europe, and another dip in the key iron ore price.
Iron ore fell 1% to $US78.60 a tonne, and the Aussie dollar dipped under 88 US cents to trade around 87.88 at 7.30 am.
New York gold edged up to $US1,222 an ounce and US oil dipped to around $US92.50, but Brent oil in London was up 0.2% at $US97.10. Copper prices again weakened.
US ten year bond yields dipped to 2.51% this morning as investors worried about any number of factors.
That was also reflected in the value of the US dollar which rose to a four year high against a basket of six major currencies.
That in turn helped explain why the euro and the Aussie and Kiwi dollars were weaker.
Wall Street fell sharply, taking its lead from big falls in Europe from 1% in London to more than 1.5% in Germany
The Dow lost 264 points or 1.5% to end at 16,945, the S&P 500 dropped 1.6% or more than 32 points to end at 1,966 and the Nasdaq dropped by nearly 2% to 4,466. The falls were the largest since the end of July, according to market data.
Both the Dow and the S&P 500 hit record highs last week, so the losses in the past few days have been notable and forced US market strategists to start wondering if this is the start of a major retreat.
But the S&P 500 fell below a key support level at 1,979, which in turn triggered a flurry of comment from market chartists and other technical traders. In fact the index has fallen in four of the last five trading sessions.
As for reasons for the fall – pick anything from those problems with Apple’s new iPhone 6 (bendy phones or a botched software update, with the shares down 3.4%), or fears the Russian government is moving to confiscate foreign property, or fears about the Middle East and the bombing in Iraq and Syria, and growing concerns about deflation as commodity prices continue to sink.
And this lack of any one issue told some market strategists that worried investors are searching to sell and grabbing any possible reason to justify their feeling of unease.
In Australia we have more obvious reasons to sell or sit on the sidelines – fears about the falling iron ore and other commodity prices, worries about the sustainability of bank profits and the continuing sluggishness in the wider economy.
