Commodities on lows, global markets drop - 13.11.2015

The US stocks were sharply declining on Thursday, the session being the worst in over a month due to the reduced commodity prices and Fed hints on the upcoming rate hike. The dollar weakened on the New York Fed President William Dudley comments with the US dollar index, a measure of the dollar’s strength against a basket of six major currencies, edging 0.49% lower at 98.528. S&P 500 fell 1.40% with all its ten sectors being in the red and energy and materials leading the decline. Dow Jones fell 1.44%. Chevron and Exxon stocks fell more than 2% each on lower oil prices, weighing on US stock indices. Advanced Auto Parts plummeted 12% on low quarterly profit. PayPal lost 3% on the news Apple Inc was planning to develop its own payment service. Retailers were among the top performers with Kohl’s shares adding 7% on better-than-expected quarterly net sates. J.C.Penny was up 3.3% and Cisco added 0.7%. During the day Nordstorm added 2.2% but after the bell it reported its weak third quarter earnings which dragged its shares 16% down. Today at 14:30 CET the US advance retail sales for September will be released, the tentative outlook is positive. At 16:00 CET the University of Michigan consumer confidence index for October will be released, the outlook is positive.

FTSEurofirst 300 index slid 1.6% down to 1,470.05 points, its sharpest decline in 6 weeks. Britain’s FTSE fell 1.7%, French CAC 40 fell 1.9% and German Dax 30 index fell 1.1%. The EUR/USD pair traded lower on the dovish ECB President comments having hit the 6-1/2 month low on Tuesday but later was supported by the weakening US dollar and rebounded to $1.0804 on Thursday adding 0.57%. Rolls-Royce cut its profit outlook for 2016 which pushed the company’s stocks 19.9% lower. The German utility RWE plummeted 9.6% after profit warning, the Dutch insurance company Aegon declined 11.1% having missed profit forecasts. Up to now, 86% of STOXX Europe 600 components have reported their earnings so far with 51% showing the results better or in line with the expectations. In Germany the preliminary GDP for Q3 was released today slightly improved from the previous reading. The EU September GDP year-over-year will be released today at 11:00 CET. No more important data is expected today in Eurozone.

Asian markets were in the red zone because of the falling commodity prices. The slump in commodities was caused by the slowing demand for them and their increasing stockpiles making the demand-supply imbalance even worse. Nikkei index fell 0.9% today after 7 straight days of increase but yet shows the weekly gain of about 1.3%. The USD JPY pair weakened 0.19% to 122.59. The Chinese yuan is weakening today against the US currency as the People’s Bank of China has cut its midpoint rate and the increased corporate demand for the dollar. The Shanghai Composite index declined 1.3%. Despite the tumbling commodities the Australian dollar holds firmly adding 0.9% yesterday due to the strong jobs reports.

Brent crude oil prices slid down to the late-August lows partly due to the weak inflation and industrial output data that were released this week in China. Brent crude futures edged 3.9% lower to $44.04 a barrel while the WTI futures traded near their 2-1/2 low of $41.54 a barrel being pushed lower by the rising U.S. stockpiles data.

Copper is falling for the 4th straight week and losing 3.3% this week. On Thursday it traded at $4.825 a tonne, slightly above its 6-year lows of $4.800 a tonne.

Spot gold traded at $1,083.20, slightly above its 6 year lows, having lost 5.2% already this month.