Dow Jones recorded largest daily drop in 5 months

Noam Stiekema

The strong USD, the weakened EUR for the program of the European Central Bank (ECB) for quantitative easing and low crude oil prices have a serious pressure on the markets in Europe and USA. The US stocks ended the session with significant losses due to increased sales. At the end of trading on Wall Street […]

Dow Jones

Dow JonesThe strong USD, the weakened EUR for the program of the European Central Bank (ECB) for quantitative easing and low crude oil prices have a serious pressure on the markets in Europe and USA. The US stocks ended the session with significant losses due to increased sales. At the end of trading on Wall Street Dow Jones lost 333 points (1.85%) to 17,663 points. This is the sharpest daily decline in the past five months. Of the “blue chips” index the heaviest shares of United Technologies Corp, Intel Corp, Goldman Sachs Group Inc and JPMorgan Chase and Co, which fell respectively by 3.57%, 3.06%, 2.79% and 2.5 %.

The index of top 500 companies S&P 500 fell with 1.7% to 2,044 points and the technological Nasdaq fell with 1.67% to 4,860 points.

From different industry groups, the slump experienced shares of technological and financial companies, followed by the industrial group. All industry groups reported declines in the last trading session. The main concerns of investors are related to the strengthening of the dollar against the EUR in the currency markets and more recent than expected increase in US interest rates. The EUR tumbled to 12-year low against the USD, fell to 1.07 USD per EUR, a day after the ECB started with asset purchases. That sent yields on government bonds in the Eurozone new record lows.

However, demand for USD increases due to the expected increase in recent US interest rates. The individual investors are waiting for the Fed meeting next week, which will likely give further indications of the behavior of the US central bank in the process of tightening monetary policy. Additional pressure on import markets and the continuing dispute between Greece and the European authorities for the country’s reforms and debt. Athens has not been able to persuade creditors to unblock the money to get through the extended rescue program. Today, German Finance Minister Wolfgang Schaeuble warned the government of Alexis Tsipras to stop wasting time and start to work on the reform package.

The stock market in New York the price of the US WTI crude oil recorded its lowest level in March. The WTI crude oil futures with April delivery fell with 1.71 USD (3.4%) to 48.29 USD per barrel. The April contracts of Brent crude oil in London fell by 2.14 USD (3.7%) to 56.39 USD per barrel.

Besides the strengthening of the USD in foreign exchange markets, fall in oil prices is associated with oversupply and continued increase in reserves of black gold in USA. Tomorrow will be published latest weekly data of the US Energy Information Agency of the dynamics of oil reserves.

Gold fell to the lowest level since November 2014 due to the appreciation of the USD. The futures price of the precious metal with delivery in April fell by 6.4 USD (0.6%) to 1,160.10 USD per ounce.

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