Equity Swoon Takes Spotlight, Pushes Dollar to Backfoot

Oct 11 10:10 2018 Print This Article

Overview:  There is one story today, and that is the sell-off in global equities.  Although the narratives put the US at the center, the fact of the matter is that US equities have been among the best performers this year, despite the rise of interest rates and a President that is not above criticizing the central bank.  Other benchmarks, like the MSCI Emerging Markets and its Asia Pacific Index and the Dow Jones Stoxx 600 in Europe were all well below 200-day moving averages.  It has taken today's follow-through decline in the S&P 500 to test its 200-day moving average (~2765) for the first time in five months.  The rout in Asia took markets down 3.5%-6.5%, with the tech-heavy Taiwan hit among the hardest (-6.3%).  European bourses are around 1.5% lower in late-morning activity, matching yesterday's loss and bring the Dow Jones Stoxx 600 loss to date to about 7.25%.  The equity slide is giving bonds a bond and yields are lower in Asia and core Europe.  Yields in the periphery are higher, led by a five basis point increase in Italy, which is trying to raise 6.5 bln euros in bond sales.    In the foreign exchange markets, the dollar is softer and ironically the yen, which often strengthens during risk-off periods, is underperforming, while the dollar-bloc is firm, and in emerging markets, the typically volatile Turkish lira and South African rand are leading, the advance.  The usually lower volatile Asian currencies like the Korean won (~-0.9%) and Taiwanese dollar (~-0.45%) are among the poorest performers today.  

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About Article Author

Marc to Market

Marc Chandler has been covering the global capital markets in one fashion or another for more than 25 years, working at economic consulting firms and global investment banks. Chandler attended North Central College for undergraduate work, where he majored in political science and the humanities. He holds master's degrees from Northern Illinois University and University of Pittsburgh in American History and International Political Economy. Currently Chandler teaches at New York University Center for Global Affairs, where he is an associate professor. A prolific writer and speaker he appears regularly in the press and has spoken for, and is an honorary fellow of, the Foreign Policy Association. In addition to being quoted in the financial press daily, Chandler has been published in the Financial Times, Foreign Affairs, and the Washington Post. In 2009, Chandler was named a Business Visionary by Forbes. In 2009, his book, Making Sense of the Dollar, was published by Bloomberg Press and received a Bronze Award from Independent Publishers.

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