European open – Markets dive on earnings

Buy the dip mentality getting crushed in October

Any hope that Thursday’s recovery was anything more than a dead cat bounce was short-lived, as a couple of disappointing earnings reports sent investors running for the hills again on Friday.

The mentality of the markets right now means that any reasons to sell are being leaped on. The earnings reports from Amazon and Alphabet are a prime example of this. Earnings for the third quarter by most companies standards were phenomenal but the bar has been raised so high that it’s becoming more and more difficult to keep up.

For this to be reason for stocks to tumble again at the end of the week says a lot more about the markets right now than it does the companies in question. The relentless buy the dip mentality, which has shored up the markets during previous downturn, is being seriously tested now as investors who have engaged in this over the last few weeks have been crushed 24 hours later. How many more beatings will they take?

Is it another dead cat bounce?

Another Trump nomination comes back to haunt him

The new appointment at the Fed is already not working out as hoped for Trump. The frustrated President, who has had no reservations about breaking with tradition and bashing the central bank for raising interest rates, may well be questioning another of his Fed appointments following his debut speech on Thursday.

Richard Clarida fell in line with his new colleagues at the Fed in supporting the need for further interest rate hikes which will infuriate and already irate Trump who views this as a real and direct threat to his policy agenda. Trump has already blamed the central bank for the stock market correction and laid the groundwork for the fault of any future economic downturns to lay at the door of the Fed.

Daily Markets Broadcast 2018-10-26

Oil lower in risk-off market while Gold creeps tentatively higher

Oil is once again being dragged lower by the risk-off sentiment that is engulfing markets going into the weekend. Sentiment has drastically changed towards black gold over the last few weeks as people have reassessed their expectations for global growth and the Saudi’s have promised to keep ramping up production as output from Iran falls under US sanctions. Inventory data hasn’t helped with some huge builds being reported over the last week or two.

Gold on the other hand has been re-establishing itself as a reliable safe haven. The global equity market sell-off has been developing in stages and the US was the straw that broke the camel’s back, with investors turning back to a reliable old friend as risk appetite fizzled out. We haven’t seen much uptick overnight but as we get closer to the open on Wall Street and get a better idea of how the week’s closing out, that may well change.

Economic Calendar

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