The US Sneezes and Europe Catches a Cold
A poor growth reading for the USA added momentum to selling in global equity markets overnight. European shares and bonds were hit hard, despite US investors largely attributing the weakness to transitory factors. Futures markets are pointing to a continuation of yesterday’s 100 point rout at the open in Australia today.
Yields for German ten year bonds doubled during European trading and the German DAX dropped 3% as the Euro mover higher against the USD. Global bond markets are moving, and yields climbing, as traders factor higher inflation expectations on the surprising strength in oil prices. This negative for bond markets provided one of the few positives for local investors, with energy shares set to outperform.
Private sector credit data today may also slow selling momentum if it drops in line with recent stronger retail sales data. Support from international investors is less likely, as the AUD maintains higher levels against the USD and Japanese yen.
For further comment from Michael McCarthy at CMC Markets please call 02 8221 2135.
Frequently Asked Questions about this Article…
Global equity markets saw a sell-off due to a poor growth reading from the USA, which added momentum to the selling. This was despite US investors attributing the weakness to transitory factors.
European markets were hit hard, with shares and bonds experiencing significant declines. The German DAX dropped 3%, and yields for German ten-year bonds doubled during European trading.
The US growth data led to futures markets pointing to a continuation of a 100-point rout at the open in Australia, indicating a negative impact on the Australian market.
Global bond markets are moving, and yields are climbing due to traders factoring in higher inflation expectations, driven by the surprising strength in oil prices.
Energy shares are set to outperform due to the strength in oil prices, which is one of the few positives for local investors amidst the current market conditions.
Yes, private sector credit data might slow selling momentum if it aligns with recent stronger retail sales data, potentially providing some market support.
The Australian dollar is maintaining higher levels against the USD and Japanese yen, which might reduce support from international investors.
For further commentary on the market situation, you can contact Michael McCarthy at CMC Markets by calling 02 8221 2135.
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