A sea of red from markets in Europe and the US – thanks to a weak quarterly report from Alcoa helping trigger a selloff, assisted by data showing OPEC countries producing oil at record levels, plus another rise in the value of the greenback.
On top of this healthcare stocks were hit by the impact of a more than 25% slide in the shares of gene sequencing company Illumina, which issued a disappointing earnings outlook. All up Wall Street suffered its biggest fall for a month on the key S&P index as the market made a tentative start to the third quarter earnings season.
Wall Street lost 1% or more, the Aussie dollar dipped, gold and oil fell and our market is staring at a 42 point slide when the ASX resumes trading at 10 am. US interest rates also rose as traders accepted the growing chance of a rate rise from the Fed in December.
Brent oil futures fell 1.5% and US crude was down 1.1% after the International Energy Agency reported that OPEC countries produced more oil in September – just as they were talking about freeing or limiting production.
The news undermined the 3% plus gains made on Monday when Russian leader, Vladimir Putin claimed his country would join any production cutback with OPEC to be discussed on November 30.
US stocks closed sharply lower Tuesday after Alcoa Inc. results started earnings season off on a weak note, blaming in part the strong US dollar for a shortfall in revenues and earnings.
That was added to by a report from FactSet, the market data company, which pointed out that the strong dollar had been cited as the main negative from the handful of companies to have reported third quarter earnings so far in the US.
Those concerns will only grow in coming weeks as the Fed meeting in December looms larger and larger.
The Dow fell 200.38 points, or 1.1%, to close at 18,128.66. The S&P 500 closed down 26.93 points, or 1.2%, at 2,136.73, and the Nasdaq Composite dropped 81.89 points, or 1.5%, to close at 5,246.79.
Alcoa shares closed down more than 11% after the weak earnings report. Europe’s Stoxx 600 index lost 0.53% as all markets lost ground. The FTSE 100 hut an all time intra high in trading because of the weakening pound.
The index is dominated by companies such as miners which get boosts from the weaker currency. The domestic facing FT 250 index continues to wallow.
Oil futures ended lower, but above the $US50-a-barrel level. November West Texas Intermediate crude futures in New York fell 56 cents, or 1.1%, to settle at $US50.79 a barrel.
Brent lost 1.5% to end at $US52.41 a barrel in London.
Comex gold futures saw their seventh drop in eight sessions Tuesday as the US dollar saw firm gains on the back of Brexit-driven losses in the British pound, which is now down more than 6% so far this month.
The Aussie dollar fell to 75.45 and is looking to fall further as the chances of a US rate rise in December increase.
The US dollar index, which tracks the value of the greenback against a basket of its major peers, is closing in on its highest level since March, and that rise helps explain the rising volatility in the market and the overnight slide.
Comex December gold fell $US4.50, or 0.4%, to settle at $US1,255.90 an ounce. December silver lost 15 cents, or 0.9%, to $US17.509 an ounce.
And Comex December copper ended at $US2.186 a pound, down 1.2 cents, or 0.6%.
The small coal producing group of stocks on the ASX, led by BHP and Whitehaven, will be boosted by news of a big price rise in the latest contract settlements with Japanese buyers. The news will offset the weakness in oil stocks.
