Dow -588.47 at 15871.28, Nasdaq -179.79 at 4526.25, S&P -77.68 at 1893.21
Is this Black Monday? Both futures and indices were ticking down heavily in pre-market. As the sentiment in market remained bearish, we saw the market continue to slide lower. However there was a slight pullback in the early session since the free fall last week. $SPY also bottomed at previous low in 10/14. I reckon that is to take out all the stops before plunging lower.
There was a sharp spike in VIX as we saw it broke above the 5-years high during intra-day. Talk about volatility swing!
Asia and Europe markets also started the week in red. Most notably was China as Shanghai Composite had another sell-off amid the weak economy growth.
Market Summary
Industry Watch
Strong:
Weak: Consumer Discretionary, Consumer Staples, Health Care, Materials, Technology
Other Market Moving Factor:
- Global equities remain under heavy pressure: China's Shanghai Composite leads way, diving 8.5%
- Index futures halted after plunging 5.0% ahead of opening bell: S&P futures halted once, Nasdaq futures halted three times
- Treasuries rally
- Euro advances on carry trade unwinds
[BRIEFING.COM] Global equity markets began the last full week of August with a broad-based tumble that began overnight in Asia and continued into the U.S. session. When the dust settled, the S&P 500 ended lower by 3.9% after opening with a 5.3% loss while the Nasdaq Composite lost 3.8% after starting the day with an 8.8% decline.
The Monday retreat began unfolding shortly after Asian markets opened for action with continued concerns about global economic growth weighing on investor sentiment. China's Shanghai Composite paced the overseas weakness, plunging 8.5%, after the weekend went by without direct policy intervention from the People's Bank of China. Instead, pension funds managed by local governments were allowed to invest in the stock market, but that development was all but ignored.
There was no respite during the European session as equity indices across the old continent faced daylong pressure with France's CAC, Germany's DAX, and UK's FTSE losing between 4.7% and 5.4%. Notably, an extension of recent selling in the DAX resulted in the index widening its slide from record highs to 22.0%, representing bear market territory.
Once the U.S. session got going, a chaotic first hour ensued, featuring wide spreads, low liquidity, and a mad dash for volatility protection. In fact, the CBOE Volatility Index (VIX 40.03, +12.00) did not produce any quotes during the first 30 minutes of the session, but once quotes resumed, the index soared past levels seen during the May 2010 flash crash. The VIX notched its high just below 53.50%, but retreated into the 40.00% area by the close.
Today's selling was far-reaching with just 136 NYSE listings ending in the green while 3079 names posted losses. Given that dynamic, it wasn't surprising to see all ten sectors end the day in negative territory with losses ranging from 3.1% (telecom services) to 5.2% (energy).
The energy sector finished the day behind other groups, widening its Q3 decline to 20.5% as crude oil contributed to the persistent weakness.The energy component was clipped by the overarching global macro concerns, tumbling 5.4% to $38.25/bbl.
Crude was unable to draw support from greenback weakness even as the Dollar Index fell 1.7%. Most notably, the dollar slid 2.8% against the yen (118.60) and surrendered 1.8% to the euro (1.1595) as the unwinding of carry trades took a toll on the dollar. Meanwhile, Treasuries rallied overnight, hitting their best levels around 9:30 ET before retreating from those highs. The 10-yr note ended the day with a gain, sending its yield lower by four basis points to 2.04%.
The intraday retreat in Treasuries occurred as stocks attempted a recovery, but the market met renewed selling and returned into the lower half of its trading range by the close.
Monday's aggressive selloff invited above-average participation with more than 1.6 billion shares changing hands at the NYSE floor.
Investors did not receive any economic data today, but a few reports will be released tomorrow. The Case-Shiller 20-city Index for June (Briefing.com consensus 5.1%) and the June FHFA Housing Price Index will both be released at 9:00 ET while July New Home Sales (consensus 511K) and August Consumer Confidence (expected 93.1) will be reported at 10:00 ET.
Global Market
Asian Markets Close: Japan’s Nikkei -4.6%; Hong Kong’s Hang Seng -5.2%; China’s Shanghai Composite -8.5%
Markets in the Asia-Pacific region were down big in a continuation of Friday’s selling on Wall Street and on continued concerns about an economic slowdown in China. Notably, Chinese authorities did not announce any new, direct monetary stimulus for the Chinese market over the weekend, although the pension funds of local governments were authorized to invest in the stock market for the first time ever. That didn’t make any difference as the Shanghai Composite (-8.5%) suffered its worst single-day loss since 2007, sliding into negative territory for the year after being up more than 50% for the year as recently as June.
Economic data
- Japan
- Leading Index 106.5 (expected 107.2; prior 107.2)
- Singapore
- July CPI -0.4% year-over-year (expected -0.2%; prior -0.3%)
Equity Markets
- Japan’s Nikkei declined 4.6%, feeling the drag of China’s weakness and the strength of the yen on Japanese exporters. The downturn was paced by the financials (-7.8%), consumer discretionary (-5.6%), health care (-5.6%), and materials (-5.2%) sectors. Central Japan Railways (-8.7%), Nippon Light Metal Holdings Co (-8.7%), and Sumitomo Realty & Development Co (-8.4%) were the biggest losers. Out of the 225 index members, Sapporo Holdings (+2.7%) was the only stock to gain ground on Monday.
- Hong Kong’s Hang Seng declined 5.2%, taking its lead from the mainland market. Kunlun Energy (-18.0%), Tingyi Cayman Islands Holding (-10.9%), and CNOOC (-8.2%) led the way lower. Out of the 50 index members, CITIC Ltd. (+0.3%) was the only stock to finish with a gain. China’s Shanghai Composite plunged 8.5%, suffering its biggest single-day loss since 2007. The selloff occurred in spite of authorities giving the okay for pension funds of local governments to invest in the stock market for the first time. The Shanghai Composite, which had been up 54.6% for the year in June, is now down 4.2% for the year.
- India’s Sensex declined 6.0% in a rout that saw its materials and utilities sectors sink 15.4% and 13.8%, respectively. Every sector though, including the influential financials (-6.5%) sector, was down for the day. Vedanta (-14.3%), GAIL India (-13.9%), and Tata Steel (-13.8%) were the worst-performing stocks. There were no winners out of the 30 index members. Hindustan Unilever (-2.7%) was the best-performing issue.
- Australia’s S&P/ASX 200 declined 4.1%, pulled lower by many of the same sectors that have been a drag all year: energy (-6.2%), resources (-5.4%), and metals & mining (-5.0%). Out of the 200 index members, 6 ended higher, 193 finished lower, and 1 was unchanged.
- Regional advancers: None
- Regional decliners: South Korea -2.5%, Taiwan -4.8%, Malaysia -2.7%, Indonesia -4.0%, Singapore -4.3%, Thailand -5.1%, Vietnam -5.3%, Philippines -6.7%
FX
- USD/CNY +0.2% at 6.4041
- USD/INR +1.3% at 66.7175
- USD/JPY -1.5% at 120.23
EUROPE
Major European indices trade lower across the board with France’s CAC (-4.6%) leading the region lower. With continued weakness in global equities, the euro has rallied more than 150 pips against the dollar to 1.1540 as investors continue unwinding euro-based carry trades. Today’s spike has extended the single currency’s four-day rally against the greenback to nearly 500 pips.
- Investors did not receive any economic data today
Closing Prices
- UK’s FTSE: -4.7%
- Germany’s DAX: -4.7%
- France’s CAC: -5.4%
- Spain’s IBEX: -5.0%
- Portugal’s PSI: -5.8%
- Italy’s MIB Index: -6.0%
- Irish Ovrl Index: -4.8%
- Greece ASE General Index: -10.5%
Macroeconomic Data
Economic Data
from Briefing.com
- No Economic Data
Market Internals
NYSE:
Higher Volumes than the day before – 1661.7M vs 1337.8M
Decliners outpaced Advancers (adv/dec): 137 / 3081
New Lows outpaced New Highs (highs/lows): 2 / 1258
NASDAQ:
Higher Volumes than the day before – 3473.9M vs 2735.7M
Decliners outpaced Advancers (adv/dec): 289 / 2653
New Lows outpaced New Highs (highs/lows): 12 / 763
VOLATILITY S&P500 (VIX)
40.74 +12.71 (+45.34%)
Technical Updates
15,871.35 -588.40 (-3.57%)
Volume: 293,917,010 (above average of 100,402,073)
Range: 15,370.33 - 16,459.75
Range: 15,370.33 - 16,459.75
4,526.25 -179.79 (-3.82%)
Volume: 926,378,475 (above average of 451,867,688)
Volume: 926,378,475 (above average of 451,867,688)
Range: 4,292.14 - 4,694.90
1,893.21 -77.68 (-3.94%)
Volume: 1,333,409,000 (above average of 566,227,277)
Range: 1,867.01 - 1,965.15
The extent of the daily range just keep increasing each session. DOW went down to around 15,360 before a short bounce back. NASDAQ opened at around the support at 4,350 area and went up for the session. S&P seems to close below its support around 1,900. To be honest, no one knows how much the market is going to move next day looking at the range this few days. But it looks like there were too many shorts in the market and we might see some form of pullback. Even so, I don't think the pullback is going to be significant.
Commodities
- Commodities plunged today following the overnight Asia sell-off. Oil prices tanked and remain near today’s lows in electronic trade.
- In today’s floor session, WTI crude oil lost -5.4% to finish at $38.25/barrel.
- WTI extended losses in electronic trading, while Brent crude oil just hit a new low for today.
- Sept natural gas, on the other hand, fell -1.1% to close at $2.65/MMBtu.
- Silver fell sharply today, leading losses in the metals space, falling -3.9% in floor trading to end at $14.73/oz. Dec gold lost -0.5% to $1153.40/oz.
- Sept copper fell -2.2% today to $2.26/lb
Energy
- October crude oil futures fell $2.19 (-5.4%) to $38.25/barrel
- September natural gas closed $0.03 lower (-1.1%) at $2.65/MMBtu
- RBOB Gasoline closed $0.07 lower at $1.47/gallon
- Heating oil futures closed $0.06 lower at $1.41/gallon
Agriculture
- December corn closed $0.04 higher at $3.81/bushel
- December wheat closed $0.05 higher at $5.09/bushel
- November soybeans closed $0.15 lower to $8.75/bushel
- Sugar #11 closed $0.05 cents lower at 10.39 cents/lb
Metals
- December gold ended today’s session $6.30 lower (-0.5%) at $1153.40/oz
- September silver closed today’s session $0.57 lower (-3.9%) at $14.73/oz
- September copper closed $0.05 lower (-2.2%) at $2.26/lb
Currencies
Dollar Falls Against Euro, Yen, and Swissy
- The U.S. Dollar Index fell 1.48% to 93.60 as carry trades that were positioned for imminent U.S. rate hikes continued to unwind. In a trading session without economic data, the pressure on global equities has caused Fed funds futures to price in only a 24% probability of a September rate hike
- EUR/USD: +1.72% to $1.1584
- The pair traded as high as $1.1714 this morning, its highest level since January 15th
- GBP/USD: +0.37% to $1.5753
- Similarly to the greenback, pound sterling has been benefiting from rate hike speculation (in this case, from the Bank of England). The pound was mostly spared today, however, as the U.S. dollar bore the brunt of the selling pressure
- USD/JPY: -2.44% to 119.06
- $/Yen traded to its lowest level since February, making a low at 116.97, again, due to the unwinding of carry trades
- USD/CHF: -1.04% to 0.9362
- USD/CAD: +0.36% to 1.3236
- AUD/USD: -1.78% to $0.7188
- NZD/USD: -2.51% to $0.6518
Bonds
Yield Curve Steepens in Equity Market Panic
- U.S. Treasuries soared this morning as investors scrambled to find safe havens from the rout in global equity markets. Governments are closing higher but well off of their best levels, with the long end of the curve giving back most of its gains. The U.S. Dollar Index took its worst losses today since the 5-point move on March 18th. Today, the index is down 1.65% to 93.44
- Yield Check:
- 2-yr: -5 bps to 0.62%
- 5-yr: -6 bps to 1.43%
- 10-yr: -4 bps to 2.04%
- 30-yr: unch at 2.76%
- News:
- Overnight, the Shanghai Composite declined -8.49% to 3,210, putting its losses from the June high at 38%. Prior to the weekend, rumors had circulated that the People's Bank of China might slash the required reserve ratio (RRR). The central bank disappointed on that front
- Before the U.S. equity market open (09:30 ET), the futures contracts on the S&P 500, the Nasdaq-100, and the Dow Jones Industrial Average went limit-down
- WTI crude declined to touch a new post-crisis low of $37.75/bbl.
- Commodities:
- WTI crude: -6.18% to $37.95/bbl.
- Gold: -0.58% to $1,152.90
- Copper: -2.63% to 2.2430/lb.
- Currencies:
- EUR/USD: +1.69% to $1.1581
- USD/JPY: -2.73% to 118.71
- Both the euro and yen spiked against the dollar as markets pushed through stop orders. That was the largest range for USD/JPY in at least one year
- Data Out Tuesday:
- June Case-Shiller 20-City Index (09:00 ET)
- June FHFA Housing Price Index (09:00 ET)
- July New Home Sales (10:00 ET)
- August Consumer Confidence (10:00 ET)
- Treasury Auction:
- $26 bln 2-year note auction (13:00 ET)
Treasury Yields:
- 2 Year Note 0.59% -0.05
- 5 Year Note 1.39% -0.05
- 10 Year Note 2.01% -0.04
- 30 Year Bond 2.73% -0.01
2/30 Spread: 214 bps ( +4 ) … 2/10 Spread: 142 bps ( +1 )
Preview for Tuesday 25 August, 2015
Economic Data
Tuesday (25 Aug) :
- Case-Shiller 20-city Index : 5.0% (Prior 4.9%)
- FHFA Housing Price Index : (Prior 0.4%)
- New Home Sales : 507K (Prior 482K)
- Consumer Confidence : 92.6 (Prior 90.9)
Earnings Highlights
Tuesday (25 Aug) :
BMO - BMO BBY DAKT DSW EJ LEJU SOL SAFM SXI PLCE TOL VAL VPG
AMC - DY GSM HEI JKHY LCI NMBL SLH ZPIN
Summary
Market has been overly sell-off for the past few sessions and it is quite obvious that the bears are certainly still in control. Monday is showing some possibility of a bounce back but the strength of the pullback remains tested in this coming week. As of now market is still very much bearish and with the increase in volatility in the market, risk management is very crucial. And position sizing too.
Meanwhile on crude oil, we saw the oil price broke below $40.00 a barrel for the first time since February 2009.
Twitted from one of my favourite trader, Steven Spencer from SMB
you look at the prices and it seems like end of the world & each time there is a massive bounce. 2/2
— steven spencer (@sspencer_smb) August 24, 2015
After Hours Report (Briefing)
Futures are lower after hours: S&P 500 futures are -19.30 from fair value of 1,889.95 and Nasdaq100 futures are -33.86 from fair value of 4,036.26.
Tomorrow morning before the open two economic reports are scheduled to be released: 1) Case-Shiller 20-city Index (Consensus 5.1%), and 2) FHFA Housing Price Index
Tomorrow before the open the following companies are scheduled to report earnings: BBY, BMO, VAL, TOL, SAFM, DSW, PLCE, SOL, EJ, SXI, DAKT, LEJU
Direction for Tuesday 25 Aug, 2015: Up
2015 Daily Directional Accuracy: 84/133 (63.16%)
2015 Weekly Directional Accuracy: 19/31 (61.29%)
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