Originally published by Rivkin Securities
Despite opening higher and trading up for the first few hours of the day, the Dow Jones slid in the afternoon to close down 1%. A late bounce saved the index from an even worse result although it is nevertheless at a four-month low. Technology stocks fared worse than the Blue Chips with the Nasdaq 100 closing down 2%. Not all sectors closed down, however, as the S&P 500 Real Estate, Utilities and Consumer staples sectors all closed more than 1% higher. Energy was the worst performing sector as the WTI oil price hovers near two-month lows. With only two trading days left, October is on track to produce the worst month for stocks since the financial crisis.
According to the CME Fedwatch tool, the likelihood of an interest rate hike in December has dropped from where it was a few weeks ago. Market pricing suggests a 70% chance of a 25-basis point hike in December, down from 80% a week ago. Market participants obviously think the Fed is less likely to hike if the stock market is performing poorly although at this stage a hike is still the most likely outcome. Further insight into this will be gleaned from the statement released at the November FOMC meeting next week.
After rallying in early October, the gold price is consolidating around US$1,230 and is certainly benefiting from the stock market volatility. Iron ore prices are holding up well, having climbed steadily through October, currently around US$71 per tonne. ASX 200 futures are down 51 points.
Data Releases:
- No Significant Data