US markets kicked off the new week in poor form plunging as falling oil prices, a stronger US dollar and resurfacing trade worries sent investors into a selling frenzy. The Dow fell for than 600 points down 2.32%, the S&P 500 fell 1.97% and the Nasdaq got smashed falling 2.78%.
The rally which saw the Dow rise from 24,122 to 26,277 last week brought about a sense of optimism in the markets, as the mid-term elections passed and President Trump indicated that there had been talks with Beijing. Yet on Monday we saw further commentary from the US President regarding oil and trade. We saw the indexes hit their sessions lows after a report from the White House circulated that indicated a draft report on auto tariffs was being prepared.
Weakness in the equity markets seen in the tech space as the S&P 500 technology index fell 3.54% and led by losses in Apples shares which fell 5% after a key supplier lower guidance. The supplier Lumentum shares fell 33%. Apple shares by example which saw a 4.41% fall in Amazon, 6.07% fall in Twitter and a 2.57% fall in Google to name a few.
Financials also took a hit after a comments from Malaysia’s finance minister indicated that he seeking a full refund on $600 million in fees on an investment deal for the Malaysian state investment fund (1MDB), gone wrong from investment bank Goldman Sachs. Shares sunk 7.5% Goldman’s worst performance in seven years. JPMorgan and Bank of American shares fell by more than 2%.
Another major theme that we saw overnight contributing towards the weakness in equity markets was a stronger US dollar as the dollar index rose 0.8% to 97.40. Investors fretted that a strengthening dollar may prove to be troublesome for overseas sales from multinationals and hurt future earnings. Oil prices also continued their downward spiral as President Trump put pressure on OPEC not to cut supply to push prices higher after OPEC’s Monday meeting where it was agreed there was a need to cut the oil supply next year by 1 million barrels per day. Light Sweet crude settled at $59.06 per barrel down 1.5%.
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