Dow Falls Below 15,000 Following Unclear Fed Message

Sentiment in Asia was extremely vulnerable as the Federal Open Market Committee (FOMC) minutes, released yesterday, failed to shed a clear light on when the U.S. will scale back its quantitative easing program. The benchmark U.S. 10 year Note hit a session high of 2.92 percent. However the Chinese Shanghai Market outperformed others on a good flash PMI release.

HSBC flash reading of China’s purchasing manager’s index or PMI roe above 50 for the first time in four months. This comes as new order soared. This latest round of good data out of the world’s second largest economy is stabilizing. This reading follows last month’s report of 47.1, which was an eleven month low.

STOCKS

On the day, the Shanghai Composite reversed losses to close up 0.2 percent. The Nikkei 225 lost 0.3 percent and in Australia, the S&P/ASX moved off a two month low to close at 5,063.90, a loss of 36 points.

After the Fed released the FOMC notes, the U.S. markets went on a wild ride. Indices were down in the final hour of trading as they neared session lows. Trading was volatile and high volume as the Dow Jones posted its sixth straight day of losses falling below the daunted 15,000 mark. Please see the below chart.

The DJIA lost 105 points to close at 14, 8897.55 and has not been bow 15,000 since July. The Dow has lost 700 points or 4.5 percent since its high of 15,638.36. This was achieved on August 2. The S&P 500 lost 10 points to close at 1,642.80 and the tech heavy NASDAQ lost almost 14 points to finish at 3,599.79.

European shares were also down on the day. The FTSE in London lost nearly 63 points and the German DAX was down 14 points on the day. All on the FOMC.

CURRENCIES

Fascinating times in the Forex markets as the Dollar Index strengthened.

The EUR/USD (1.3336) fell sharply after the FOMC minutes. So did the GBP/USD (1.5597) and the Yen (98.13) as it is now testing the key resistance near 98.38. The dollar has gained some strength as the U.S. 10 year Note hit a high at 2.92 percent. Its yield is currently 2.8550 percent. Looks like we could be heading to 3 percent before the end of the month if not 3.05 percent.

Right now we see limited room for growth on the GBP/USD which has strong resistance at 1.5769. The EUR/USD is still locked in a broader sideways pattern from 1.3300 to 1.3415 as it looks for direction. The USD/JPY has broken above 98.39/40 and could test 100.00 at some point now. We are far from overbought at these levels.

COMMODITIES

Commodity land fell all over after the FOMC release.

As the Dollar Index rose, Gold (1358.90) fell. We have strong resistance at 1375.90 capping gains for now. Silver (22.765) has also fallen. Looks like we are trading sideways for a bit before it rises again towards 23.90.

Copper (3.331) has risen but is now trading sideways as well. While above 3.300 we are bullish towards 3.40.

TODAY’S OUTLOOK

Investors are not done digesting the nothingness out of the FOMC minutes. The notes revealed nothing and no clarity was gained. This was not a shocker, and we knew markets would not like this.

A plethora of U.S. data releases will keep the markets busy all day long. Jobless claims, the PMI flash index, leading indicators, Fed balance sheet and fed President Fisher will speak as well.