Global Market Wrap: European Equity Trading Goes Red

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Global Market Wrap:

European Equity Trading Goes Red

Equity Futures: Dow -34.00. S&P -3.60. NASDAQ -6.50. Japanese Nikkei -3.00. German Dax -40.00.

Every stock market in Europe is trading in the red, without any exceptions as investors continue to cash in ahead of the upcoming earnings season. Moreover, the recent streak of weaker than expected macroeconomic data acted as a clear reminder that the global recovery period will be slow and lengthy.

European Trade: The markets most affected by the selling wave were the emerging markets, which so far have lost around 2%, compared to the 1% lost by the European blue chip companies. At this point, only three mature markets managed to decline less than 1%, the U.K. FTSE, which lost 0.50% together with the German Dax and Sweden OMX, both being down 0.70%. 

The weakness seen in the European markets over the last two weeks of trading had a positive effect in Europe’s debt market. German bunds, which are the most liquid European debt instrument, and the second most liquid in the world after U.S. Treasuries, advanced in Friday trade, with the 10-year Bund yield losing 23 basis. For now, the German Bunds have a slightly smaller yield compared to their U.S. counterparts, even though the Fed has a much smaller key interest rate. 

S&P Futures: Ahead of the NFP report, the S&P futures had a range of only 3 points during the overnight session. Ahead, it is widely expected that the S&P futures will continue trading on light momentum until the U.S. session opens. In Thursday trade, the S&P futures plunged almost 30 points, the most over the last few months of trading.

S&P Technical View: TheLFB Member Charts
4 Hour chart trend: Mixed. Main price points: 73. Looking for: Wave II)

On the four hour wave count we are still looking for a possible flat pattern in a red corrective wave II), with wave c in process. We can count three waves up in wave a, three waves down in b and now the market is currently trading in higher leg c. Leg c of a flat pattern is the only wave that is sub-divided by a five wave move. Another push higher into wave v) of a black c is expected over the coming session.
If the wave count is correct then a flat pattern of wave II) should be completed around 73 dollars per barrel.

Gold for October delivery was recently trading lower by $1.10 to $998.60. Gold is trading just above the 998.00 area, the same area that acted as a support level in Thursday trading. Over the last few days of trading, gold was not able to develop a trend on its own, and most of the time it just followed the moves seen in the forex market.

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