CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Equity rout deepens, US yields drift lower

07:07 25 October 2018

Summary:

  • US indices sank on Wednesday, stocks in Japan and China followed

  • Microsoft (MSFT.US) reported better earnings

  • US bond yields drift lower on the back of a flight to haven assets

The US stock market already erased all its gains it had made this year as a rout deepened on Wednesday. The NASDAQ (US100 on xStation5) was the worst performing index plummeting as much  as 4.4% - its worst daily decline since August 2011. Its peers did not perform much better as well with the SP500 (US500) sinking 3.1% and the Dow Jones (US30) dropping 2.4%. Looking into the technologic index one may notice that the largest losses were made on stocks such as Nvidia (-10%), Netflix (-9.4%) or Texas Instruments (-8.2%). In turn, when it comes to earnings reported after the market close yesterday it is worth noting the results from Microsoft. The company reported EPS of $1.14 on $29.1 billion revenue, both figures turned out to be well above analysts’ expectations pointing to $0.96 and $27.9 billion respectively. What did the earnings come from? The positive surprise was mainly due to cloud business which brought as much as $8.57 billion of revenue in the third quarter meaning a 24% increase. On top of that the company’s productivity and business processes segment (it includes the Office line) saw revenue equal $9.8 billion which meant an increase of 19%. Finally, the personal computing business saw $10.7 billion revenue. To sum up, as much as 161 companies listed on the SP500 already reported their financial results for the third quarter. The average earnings surprise has been 4.6% so far while the sales surprise has seen 0.85%. These numbers are slightly below the final values seen at the end of the prior season albeit there is still a lot of firms which have yet to post their results hence a lot could change.

Start investing today or test a free demo

Open account Try demo Download mobile app Download mobile app

The NASDAQ (US100) broke through its 200DMA which was helping bulls since November 2016. From this point of view one may assume that it could be something more than just a corrective pullback. If the index continues moving lower bears could take a stab at heading toward 6200-6300 points. Source: xStation5

The enormous losses on Wall Street as well as in Asia has propelled demand for safe haven assets and this is seen especially in the US bond market and the Japanese yen. Namely the yen is trading nearby 112 against the US dollar this morning meaning more than a 0.2% increase. In turn, the US 10Y yield declined yesterday to below 3.10% from 3.17%. In such environment the US dollar is giving back its earlier gains and as a result the Bloomberg dollar index is trading 0.15% lower on the day. On the other hand, EM currencies have not seen any particular losses so far suggesting that gloomy moods are mostly present across equity markets. The reason behind declines in stock markets may be the fact that global central banks are draining liquidity via shrinking their balance sheets, we mean three banks in particular - the Federal Reserve, the ECB as well as the Bank of Japan. This in conjunction with the stuttering global economy could result in worse earnings reported by firms globally and thereby contribute to lower valuation of stocks. Let’s sum up that the Japanese NIKKEI (JAP225) is trading 3.5% lower, the Shanghai Composite is down 1.7% while the Hang Seng (CHNComp) is down 2%. Stocks in Australia ended the day with a 2.8% slide. Notice that relatively better performance in China could stem from the fact that the authorities have announced an array of measures to shore up the economy and the stock market as well.

The NIKKEI (JAP225) has sunk toward its crucial support trend line. Breaking this level could push the valuation even below 20k points. Source: xStation5

In the other news:

  • BoJ’s Wakatabe said that vigorous expansionary economic policies are necessary in the wake of a financial crisis

  • New Zealand’s trade balance for September totalled -1560 million NZD vs. -1365 million NZD expected

  • Fitch affirmed Australia at AAA with a stable outlook

  • SP500 futures are trading 0.2% higher, DAX futures are sliding 0.8%

This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.

Back
Xtb logo

Join over 1 Million investors from around the world

We use cookies

By clicking “Accept All”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.

This group contains cookies that are necessary for our websites to work. They take part in functionalities like language preferences, traffic distribution or keeping user session. They cannot be disabled.

Cookie name
Description
SERVERID
userBranchSymbol cc 2 March 2024
adobe_unique_id cc 1 March 2025
test_cookie cc 1 March 2024
SESSID cc 9 September 2022
__hssc cc 1 March 2024
__cf_bm cc 1 March 2024
intercom-id-iojaybix cc 26 November 2024
intercom-session-iojaybix cc 8 March 2024

We use tools that let us analyze the usage of our page. Such data lets us improve the user experience of our web service.

Cookie name
Description
_gid cc 9 September 2022
_gat_UA-22576382-1 cc 8 September 2022
_gat_UA-121192761-1 cc 8 September 2022
_ga_CBPL72L2EC cc 1 March 2026
_ga cc 1 March 2026
AnalyticsSyncHistory cc 8 October 2022
af_id cc 31 March 2025
afUserId cc 1 March 2026
af_id cc 1 March 2026
AF_SYNC cc 8 March 2024
__hstc cc 28 August 2024
__hssrc

This group of cookies is used to show you ads of topics that you are interested in. It also lets us monitor our marketing activities, it helps to measure the performance of our ads.

Cookie name
Description
MUID cc 26 March 2025
_omappvp cc 11 February 2035
_omappvs cc 1 March 2024
_uetsid cc 2 March 2024
_uetvid cc 26 March 2025
_fbp cc 30 May 2024
fr cc 7 December 2022
muc_ads cc 7 September 2024
lang
_ttp cc 26 March 2025
_tt_enable_cookie cc 26 March 2025
_ttp cc 26 March 2025
hubspotutk cc 28 August 2024

Cookies from this group store your preferences you gave while using the site, so that they will already be here when you visit the page after some time.

Cookie name
Description
personalization_id cc 7 September 2024
UserMatchHistory cc 8 October 2022
bcookie cc 8 September 2023
lidc cc 9 September 2022
lang
bscookie cc 8 September 2023
li_gc cc 7 March 2023

This page uses cookies. Cookies are files stored in your browser and are used by most websites to help personalise your web experience. For more information see our Privacy Policy You can manage cookies by clicking "Settings". If you agree to our use of cookies, click "Accept all".

Change region and language
Country of residence
Language