Summary:
- Notable selling today with the US500, DE30 and UK100 all lower
- Declines come on the 30th anniversary of Black Monday
- Apple shares slide on iPhone production concerns
- Gold and Bitcoin on the rise
- Pound sinks on soft retail sales number
On this day back in 1987 the US stock market experienced its largest ever single-day drop with the Dow Jones (US30 on xStation) plummeting by more than 500 points or 20%. The markets have developed substantially since then but there are still those who believe we could see a similar decline once more. We explore this possibility in more detail here.
In keeping with the momentous occasion, stock markets have duly sold off today – all be it in a far smaller and more orderly fashion. The DE30 was hit by a wave of selling this morning and whilst it has recovered somewhat the market remains below the 13000 level. Whilst there are some similarities between today’s macroeconomic backdrop and that in 1987, there are marked differences. Even though both years saw strong rises in the US markets, the present rally comes after a flatter period and there would have to be substantial gains in the coming years to match the kind of rise seen in the mid 80s.
Today’s selling in US stocks stems in part down to drop in Apple, with the tech giant falling more than 1% after reports that it had lowered its production quota for the iPhone 8 due to less demand than previously expected. The news saw the share price take a quick swoon on the open and the fall contributed to a second consecutive notable sell-off in the tech-heavy US100 following the cash open.
Gold has gained today in the risk-off flows with the market rising back to test a potentially important resistance zone around 1290. Some strong US data halted the rally in its tracks after initial jobless claims fell to their lowest level since 1973 and the Philly fed manufacturing index beat forecasts. A more comprehensive technical overview of the precious metal can be found here.
Speaking of Gold, Goldman Sachs released a note today stating that whilst their are parallels between them, Bitcoin is not the new gold. Wednesday’s decline in Bitcoin saw investors rush to pile in to the market with the drop being eagerly bought during the evening. Price has moved higher today by around 3% and the cryptocurrency is once more back near its all-time high of 5843.
This morning saw the 3rd day in a row with a significant data release from the UK, with retail sales falling fairly sharply. A 0.8% decline m/m came as quite a shock after 3 consecutive beats for this metric and the pound is looking increasingly vulnerable to further declines as Brexit talks continue to wrangle on with little seen by the way of progress.