Markets Overnight: Equities Lower, Led by Emerging Markets

by Enis September 25, 2013 4:47 am • Commentary

Stocks in Asia and Europe were mostly red, with markets most focused on the U.S. political gridlock.  S&P 500 futures were down to a 1687 low overnight, a new 8 day low.

  1. Asian Equities Decline, Led by Indonesia and India – Once again, it was the emerging market stocks that bounced the most last week that were weakest on the downside.  Japan and Hong Kong also closed in the red with selling picking up after the European open.
  2. European Stocks Lower – The global focus continues to be on the U.S. Congress, with little new economic data.  The Euro Stoxx 50 is down about 0.5%.  The winning German party, the CDU, looks to be warming to a potential coalition with the Greens, as the SPD sounds more opposed to any alliance.
  3. Commodities and Bonds Green – However, volumes were light, and moves were small.  No major commodity is moving more than 1% higher.  The 10 year U.S. Treasury yield has moved below 2.64%.  Counterintuitively, the risk-off environment caused by the budget standoff has done what the Fed has been unable to do – move Treasury yields lower.
  4. Alibaba IPO talks with Hong Kong Exchange Break Down – That makes it more likely that Alibaba will end up listing in the U.S., which would make it one of the biggest IPOs in the U.S. market over the last 5 years, rivaling the Facebook IPO in May 2012.  The IPO’s pricing will have an impact on YHOO stock as well.
  5. Durable Goods Data at 8:30 am, New Home Sales at 10:00 am  – Very Durable Goods are expected to decline 0.2%, though ex-Aircraft, they are expected to rise 1.0%.  New Home Sales are expected at a 420k annualized rate.  Yesterday’s reports from LEN and KBH were optimistic on the housing environment despite the recent rise in rates.