• Asian indices have been able to add some gains despite the grim performance across the pond
  • A string of gloomy earnings weighed on the US indices on Wednesday, both SP500 and Dow Jones marked their biggest declines since 5 September
  • US dollar drops across the board, except for NZD which got the grimmer trade data

The Asian session has brought quite the decent performance of the local equity markets as most of them trade higher just a moment before the close. It seems to be a little bit weird when we have a look at Wall Street where losses were seen across the board. To be precise, the SP500 (US500 on xStation5) and the Dow Jones (US30) posted on Wednesday their biggest one-day declines in more than seven weeks mainly on the back of a string of disappointing earnings, they were able to trim early losses though.

link do file download linkBoth US500 and US30 marked their biggest one-day declines on Wednesday but strong support zones halted the losses. Source: xStation5

The big question which everybody seems to ask about is what drove the markets down? One needs to underline two stocks Chipotle Mexican Grill (CMG.US) and chip maker AMD (AMD.US) which weighed definitely the most. The former slumped 15% after posting much weaker than expected financial results late Tuesday whereas the latter managed to beat the consensus, however there was guesswork that investors were fretting over the company’s outlook which may not have been as strong as they hoped. Either way, AMD plunged yesterday more than 13% while Chipotle Mexican Grill plummeted nearly 15%.

As far as the FX market is concerned, the US dollar is taking a step back in early trading being the poorest currency in the G10 basket even as we knew no data which could have justified such depreciation. Moreover, the NZ dollar is sliding as well due to a larger trade deficit reported for September (-1143m NZD vs. -900m NZD expected) which was caused by a lower increase of exports and a higher pick-up in imports.

link do file download linkTechnically the US500 seems to have already realized a bullish scenario which we sketched out some time ago. Consequently, the index managed to strike a target placed in the vicinity of 2580 points where an ominous candlestick was drawn. That said, an extended pullback cannot be ruled out and once bears break through a local support line at 2542 points, a decrease towards 2480 points could be in the offing. Source: xStation5