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T3's Take 3: Asian Economic Data Slams Crude Oil, Drags Down Equities


Today's financial recap and tomorrow's financial outlook.

Today on T3 Live

T3 Live cordially invites you to our first annual Finance Festival, scheduled for November 6-8 in sunny Miami, Florida.

And we are proud to announce that derivatives trading guru and former hedge fund manager John Succo will join our panel on the Fed.

John, currently a professor at Indiana University, was one of the most popular contributors in Minyanville history, and is considered a legend for his sharp market analysis during the financial crisis.

John will be joined by a truly impressive team of Wall Street experts, including Barry Ritholz, Nicole Sherrod, Evan Lazarus, Doug Robertson, Josh Brown, JC Parets, and many more.

Read about the event here.
World Equity Markets

Asian markets experienced a rocky day of trading with all major indices finishing lower. The Shanghai Composite opened lower after the government released weak PMI data, showing factory activity in China fell at its fastest place in three years. The index was able to regain some of its losses as trading progressed, closing down 1.2%.

The Chinese government is suspected to be boosting up markets ahead of a military parade on Thursday. Japan's Nikkei fell 3.8%, Taiwan's TAIEX closed down 1.9%, and Hong Kong's Hang Seng dropped 2.2%.

The region was also under pressure from a collapse in South Korean exports.

Europe was pulled down by China's performance and weak economic data as well. Markit data showed that manufacturing growth slowed slightly in August. However, data also showed that unemployment in the area reached a three-year low. All major indices fell more than 2%. Both the German DAX and French CAC fell about 2.4%.

The S&P 500 and NASDAQ closed down 3.0% in a very ugly session as the negativity flowed stateside. The VIX rose as high as 33.82 intraday before dipping to end the day at 31.29, up 10.1%.

Economic data was mixed, with manufacturing expanding at its slowest pace since 2013, while construction activity increased slightly. Domestic auto sales were reported better-than-expected for the Big 3 automakers.

The US dollar had a mixed performance among international currencies, losing value against the Yen, euro and Swiss franc, but gaining slightly against the Australian dollar.

Oil Falls Back

Yesterday, oil prices rallied on reports that OPEC was willing to talk with other oil producing countries about low oil prices, capping off the biggest three-day rally in 25 years. Today, crude oil dropped 8.3% due the weakness in Asian economic data. US crude oil inventory data will be released tomorrow and is expected to show increased stockpiles.

Energy stocks, which were the market's top performers yesterday, fell 3.5% today, putting them at the bottom in terms of major sectors.

Safe Havens

The equity rout drove demand for safe haven assets. Gold futures saw an increase in prices from the sell-off, settling at their highest level in more than two weeks.

US treasury yields saw a drop. The yield on 10-year notes fell 3.2 basis points to 2.1683%. The 5-year dropped 4.7 basis points to 1.4956%.
Wednesday's Financial Outlook

US economic data for tomorrow will include MBA mortgage applications, ISM New York, factory orders, DOE crude oil inventories, and the Fed will release its Beige Book.

Overseas economic data will include British construction PMI, Australian trade balance and retail sales, and Japan's Nikkei PMI.

Navstar (NAV) will release earnings before the open. ABM Industries (ABM) and NCI Building Systems (NCS) will release their earnings after the close.
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