Asian Markets Slide

Asian markets lost ground this morning after U.S. markets saw their largest two day loss since June. These losses come as investors fear that the good economic data coming out of the United States will cause the Fed to begin tapering back its asset purchase program.

The fall on Wall Street will help Asian and European markets lower today. The U.S. averages saw huge losses as the DJIA lost over 200 points. Investors are worried the Fed will begin to reduce its bond buying program sooner than later. Investors do not like this prospect.

Strong economic data is the reason for this latest round of jitters. Consumer prices rose in July. They were up 0.2 percent as they met expectations. Weekly jobless claims hit their lowest point in six years. This fear sent the U.S. 10 year T-Note spiking 2.80 percent before settling back down 2.75 percent. Please see the below chart.

STOCKS

The Nikkei 225, which lost 2 percent yesterday, has now hit a four day low as it lost 1.3 percent on a strong yen. The yen is trading around $97.40 versus the U.S. Dollar. In Australia, the S&P/ASX traded below 5100 points at one point, the index closed at 5117.80, losing 34 points. Both the Kospi and the Shanghai have each lost 0.4 percent on the day.

U.S. markets saw stocks closing near session lows as the Dow Jones lost 225.47 points. Bond yields spiked to their highest points in two years as investors feel September is the month the Fed will taper back its quantitative easing program. The S&P 500 lost 24 points, 1.4 percent, to close at 1,661.32 and the tech heavy Nasdaq Composite lost 63 points, 1.7 percent, and closed at 3,606.12.

The European FTSE EuroFirst 300 was off 1.1 percent at 1,227.14 points on thin trading. Markets in Portugal, Greece, Luxembourg and Austria were shut for Assumption Day. The DAX lost 61.83 points and the CAC 50 was unchanged. The British FTSE tumbled over 1 percent on the day.

CURRENCIES

With bond yields spiking nearly 3 percent on the U.S. T-Note, the Dollar Index (81.14) fell sharply yesterday. We are seeing a lot of dollar weakness today.

The EUR/USD (1.3345) rose from 1.3205 and we can test the key resistance at 1.3390 today. The GPB/USD (1.5631) has also risen. This pair is up from 1.5519 and could target 1.5724 and 1.5730. The USD/JPY (97.59) is a bit muddled right now. The market has strong support at 96.15 which we hope holds.

COMMODITIES

Commodities have risen well overnight. Gold (1364.10) is up as we are seeing an increased demand from China. We see strong resistance at 1380.00. Copper (3.337) has also risen once again. We can now target 3.40 with a break above that testing 3.40/50.

Brent WTI Crude (109.70) can test its midterm resistance level at 110.95. If this holds, we can test lower back towards 108.00.

TODAY’S OUTLOOK

Markets in Europe will be reacting to the sell offs in the United States and China. The Fed might start reducing its massive bond buying program sooner than later.

As far as data today, we will see U.S. housing starts and consumer sentiment.