CMC Markets Weekly Report
Stocks in the U.S ended sharply lower across the board Friday, logging their worst one-day drop in almost four months, pressured by disappointing quarterly results that highlighted the global economic slowdown.
Stocks in the U.S ended sharply lower across the board Friday, logging their worst one-day drop in almost four months, pressured by disappointing quarterly results that highlighted the global economic slowdown.
The Dow Jones Industrial Average plunged more than 200 points, wiping out almost all of its gains for the week. The S&P500 and the Nasdaq also ended near session lows. Friday also marked the 25th anniversary of Black Monday, when the U.S. stock market went into a free fall and the Dow lost 22.6 percent in a single trading session.
On the economic front, existing home sales dipped in September to a seasonally adjusted annual rate of 4.75 million units, according to the National Association of Realtors.
European shares closed lower. German Chancellor Angela Merkel raised new hurdles to using the eurozone's bailout fund to inject capital directly into ailing banks from next year, dashing Spain's hopes of soon removing the cost from its national debt.
Spanish Prime Minister Mariano Rajoy, who received a eurozone pledge earlier this year of up to 100 billion euros to recapitalize the nation's banking sector, said he had still had not decided whether to request a sovereign bailout.
The Euro and commodity currencies eased modestly against the US dollar in trade on Friday. The Euro eased from highs near US$1.3075 to around US$1.3015 and closed US trade near US$1.3020. The Aussie dollar fell from highs near US103.65c to lows near US103.15c before ending US trade near US103.30c. And the Japanese yen held between 79.12 yen per US dollar and JPY79.40 and ended US trade near JPY79.28.
Benchmark crude oil prices fell in line with equities and other commodities on Friday. Brent crude fell by US$2.28 to US$110.14 and dropped over the week by US$4.48 or 3.9 percent. US Nymex crude fell by US$2.05 to US$90.05 and fell over the week by US$1.81 or 2.0 percent. Oil prices rose by around 2.2 percent the previous week.
Base metal prices fell in line with other commodities on Friday. Metals fell by 1.9-2.5 percent on the London Metals Exchange. Over the week metals fell by up to 2.7 percent (zinc) although tin fell by only 0.1 percent. The gold price also fell on Friday, with the December Comex gold futures down by US$20.70 to US$1,724.00 an ounce. Gold fell by 2.0 percent over the week. And the spot iron ore price fell by US20c on Friday to US$115.30 a tonne, but rose US80c over the week.
In economic news, The Reserve Bank of Australia (RBA) assistant governor, Guy Debelle is due to speak to the Australian Securitisation Forum 2012 in Sydney today. The Federal Government is set to release the mid-year budget review, whilst in the U.S, no major economic data is issued.
Frequently Asked Questions about this Article…
U.S. shares fell sharply after disappointing quarterly results that highlighted a global economic slowdown, triggering the market’s worst one-day drop in almost four months. The Dow plunged more than 200 points and the S&P 500 and Nasdaq finished near session lows. Friday also coincided with the 25th anniversary of Black Monday, a notable historical market sell-off.
Existing home sales in September dipped to a seasonally adjusted annual rate of 4.75 million units, according to the National Association of Realtors. Investors watch existing home sales because housing activity influences consumer spending, construction, interest rate expectations and related sectors such as banks, homebuilders and materials suppliers.
German Chancellor Angela Merkel raised new hurdles to using the eurozone bailout fund to inject capital directly into banks, dampening Spain’s hopes of removing bank costs from its national debt. Political moves like these can affect sovereign debt perceptions, banking sector stability and investor confidence across European markets.
The euro eased from about US$1.3075 to near US$1.3015, the Australian dollar fell from roughly US$1.0365 to US$1.0315 (ending near US$1.0330), and the Japanese yen traded around JPY79.12–79.40 per US dollar (ending near JPY79.28). Currency swings can affect the value of international investments, import/export-exposed companies and commodity prices, so investors with FX exposure should be aware of these moves.
Commodity prices fell alongside equities: Brent crude dropped about US$2.28 to US$110.14 and US Nymex crude fell about US$2.05 to US$90.05. Base metals fell roughly 1.9–2.5% and gold futures slipped US$20.70 to US$1,724 an ounce. Commodities often reflect growth expectations and inflation pressures; falling prices can signal weaker demand and affect energy, mining and materials stocks.
The spot iron ore price fell US$0.20 on Friday to US$115.30 a tonne but rose by US$0.80 over the week. That intra-week volatility highlights how commodity prices can move in response to changing demand expectations and broader market sentiment.
The report flagged an RBA assistant governor speech (Guy Debelle speaking to the Australian Securitisation Forum in Sydney) and the Federal Government’s mid-year budget review as events to watch. The report noted no major U.S. economic data was due that day. Speeches and budget updates can influence rate expectations, fiscal policy outlooks and market sentiment.
When markets drop, everyday investors can review their time horizon, ensure their portfolio matches their risk tolerance, avoid knee-jerk decisions and consider diversification across asset classes. Monitoring key indicators mentioned in the report—corporate earnings, housing data, policy developments and commodity trends—can help inform longer-term decisions rather than reacting to one-day volatility.
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