Its been another rough day in the markets with the FTSE 100 falling as low as 6,070 earlier in the day before bouncing back to finish at 6,202, meaning that the index now yields around 3.5%. After the Dow Jones industrials fell over 460 points at one stage yesterday before recovering to finish the day down 173 points its been another volatile session today with the S&P 500 flat at 1,862 and the Dow down 29 points at 16,109 after falling as low as 15,935. The falls mean that the FTSE 100 is now down 5.3% in the last year and way off its early September peak of 6,904 and the S&P 500 has lost 9.5% since its September 19th high and erased all its 2014 gains.
Dow Jones Industrials and FTSE 100
A perfect storm of worry caused by falling oil prices (with Brent crude oil falling below $83 a barrel at one point before finishing over $84), weak economic data from the US relating to producer price and retail price data, mixed third quarter earnings news from the US, worries about the eurozone economy and the potential spread of Ebola have all taken their toll on sentiment. Investors have panic sold and piled into bonds and money market funds. Though like many I was expecting a sell off after the unprecedented upward trajectory of the S&P 500 in the last few months, the size and speed of the sell off has been surprising. Factors like the unravelling of the Shire, Abbvie tax inversion driven takeover have also hurt sentiment even in supposed safe haven pharmaceutical stocks which have seen big gains this year on the back of corporate activity.
With the Federal Reserve keen to make sure that the American economic recovery stays on track and the European Central bank primed to start its asset purchase programme at the end of this year it seems enough of a back stop to prevent a huge amount of further carnage in the markets. But with volatility rising and fear growing this is throwing up many trading opportunities and certainly to me there looks like valuations have returned to much more reasonable levels in many shares.
The collapse of the oil sector has been amazing and seeing the likes of Tullow Oil at 7-8 year lows has been an eye opener. The steep fall in the oil price from $113 a barrel at the end of June has been astonishingly rapid and taken many oil traders by surprise. You would think that some stability would resume after such a fall but all depends on OPEC. Trying to bottom fish the oil sector this week has not been easy!
Many private investors in popular stocks using leveraged products such as spread bets and CFDs have probably had a painful week and for those with insufficient margin cushions it may well have been disastrous. Many AIM favourites have had the stuffing kicked out of them and are at prices last seen during the financial crisis of 2008/2009. Surely a potential buying opportunity for many of these names for those with the stomach for it.
Contrarian Investor UK
IMPORTANT: The posts I make are in no way meant as investment suggestions or recommendations to any visitors to the site. They are simply my views, personal reflections and analysis on the markets. Anyone who wishes to spread bet or buy stocks should rely on their own due diligence and common sense before placing any spread trade.
by contrarianuk
Market volatility continues
Oct 16, 2014 at 4:00 pm in Market Commentary by contrarianuk
Its been another rough day in the markets with the FTSE 100 falling as low as 6,070 earlier in the day before bouncing back to finish at 6,202, meaning that the index now yields around 3.5%. After the Dow Jones industrials fell over 460 points at one stage yesterday before recovering to finish the day down 173 points its been another volatile session today with the S&P 500 flat at 1,862 and the Dow down 29 points at 16,109 after falling as low as 15,935. The falls mean that the FTSE 100 is now down 5.3% in the last year and way off its early September peak of 6,904 and the S&P 500 has lost 9.5% since its September 19th high and erased all its 2014 gains.
Dow Jones Industrials and FTSE 100
A perfect storm of worry caused by falling oil prices (with Brent crude oil falling below $83 a barrel at one point before finishing over $84), weak economic data from the US relating to producer price and retail price data, mixed third quarter earnings news from the US, worries about the eurozone economy and the potential spread of Ebola have all taken their toll on sentiment. Investors have panic sold and piled into bonds and money market funds. Though like many I was expecting a sell off after the unprecedented upward trajectory of the S&P 500 in the last few months, the size and speed of the sell off has been surprising. Factors like the unravelling of the Shire, Abbvie tax inversion driven takeover have also hurt sentiment even in supposed safe haven pharmaceutical stocks which have seen big gains this year on the back of corporate activity.
With the Federal Reserve keen to make sure that the American economic recovery stays on track and the European Central bank primed to start its asset purchase programme at the end of this year it seems enough of a back stop to prevent a huge amount of further carnage in the markets. But with volatility rising and fear growing this is throwing up many trading opportunities and certainly to me there looks like valuations have returned to much more reasonable levels in many shares.
The collapse of the oil sector has been amazing and seeing the likes of Tullow Oil at 7-8 year lows has been an eye opener. The steep fall in the oil price from $113 a barrel at the end of June has been astonishingly rapid and taken many oil traders by surprise. You would think that some stability would resume after such a fall but all depends on OPEC. Trying to bottom fish the oil sector this week has not been easy!
Many private investors in popular stocks using leveraged products such as spread bets and CFDs have probably had a painful week and for those with insufficient margin cushions it may well have been disastrous. Many AIM favourites have had the stuffing kicked out of them and are at prices last seen during the financial crisis of 2008/2009. Surely a potential buying opportunity for many of these names for those with the stomach for it.
Contrarian Investor UK
IMPORTANT: The posts I make are in no way meant as investment suggestions or recommendations to any visitors to the site. They are simply my views, personal reflections and analysis on the markets. Anyone who wishes to spread bet or buy stocks should rely on their own due diligence and common sense before placing any spread trade.