Asian markets joined the global financial rout as they moved lower as investors worried that an American strike on Syria is imminent.
It could be this is the beginning of a wild time for the global markets and Syria was the spark. We have several known factors that will be bearish for the markets:
- The QE taper in the United States
- German elections
- Australian elections
- Possible emerging market liquidity freeze.
Fear of U.S. military action against Syria sent markets tumbling. Wall Street saw its worse day since June. The DJIA is now at a two month closing low. European markets saw their biggest daily losses in two months. All this came after U.S. Defense Secretary told BBC that the United States “was ready to go” is President Obama gave the word.
STOCKS
The Nikkei lost 2.3 percent to fall below 13,240 and has hit a two month low. The yen strengthened beyond the $98 level against the dollar. We will wait on deputy bank governor Kikuo Iwata to speak today as that will influence the yen’s movement. The Australian S&P/ASX is now at a three day low and the Shanghai Composite was flat. The South Korean Kospi lost 0.6 percent.
U.S. markets skidded and the Dow Jones has hit a two month low after Hagel’s comments that the U.S. could strike as early as Thursday.
The flood gates are open on the DJIA which lost 170.33 points, 1.1 percent, to close at 14,776.13. This is the thirteenth decline for the month and is on track for its worst month since May 2012. So is the S&P 500 which lost 26.30 points to close 1,630.48. This was a loss of 1.59 percent. The Nasdaq Composite tumbled over two percent to close at 3,578.52. This was the worst day both of these indices has seen in over two months.
Europe was also rocked yesterday. Spain’s IBEX was down nearly three percent at 2.7 percent. The FTSE MIB lost 2.3 percent and the CAC, in France, lost 2.1 percent. The German DAX was also down over two percent on the day.
CURRENCIES
The EUR/USD (1.3384) is moving higher, as we thought. We need to break the key resistance level at 1.3400 to really bring out the bulls. The GBP/USD (1.5528) lost ground to 1.5479 but has now recovered. We are ranged from 1.5590 and 1.5500 for right now.
The USD/JPY (97.13) fell sharply through 98.00 overnight. We can now target 96.00. If that support breaks, the flood gates will open bringing out the bears.
COMMODITIES
Nymex Crude (111.64) has gone above 110. At this point the doors are open for 112.00 and then 113.90. Gold (1416.20) has soared above 1400. We now see 1425 in the bulls’ sights with a break above that testing. 1450 and then 1500.
Today’s Outlook
Syria, Syria and Syria. The world is waiting on whether or not the U.S. will keep its word to Syria that if it broke the red line and used weapons of mass destruction that it would attack. We wait and see.
As far as data, the U.S. will release MBA mortgage application, pending home sales and oil inventories.