Morning update: stocks sell-off sharply

Equity markets selloff in early trading, and gold continues to benefit from the drops in stocks.

London
Source: Bloomberg

Asia was quiet overnight as China is on holiday for the Lunar New Year, and the Japan 225 finished higher as a soft yen boosted equities.

Stock markets in Europe tried their best to hang onto the positive start but it didn’t last long as the downward trend that has been in place since late January took precedence. Equity markets can’t hold a rally and the moves to the downside are sharp and fast.

The FTSE 100 has printed a fresh low for February and the next big support levels in sight are 5769 and 5688. Bounces may see more short sellers entering the market and rallies will encounter resistance at 5821.

The Germany 30 is at its lowest level since late October 2015, and there is no sign that the downward trend is coming to an end. The 9000 mark is on the horizon for the bears.

The dollar has pulled back after the broadly positive US jobs report on Friday, and EUR/USD and GBP/USD are enjoying the move higher. The upward trend for both markets still holds but traders need to be cautious that the US dollar acts as a safe haven when stock markets are falling.

Gold is continuing to push higher, and the buy-the-dip strategy is still popular with traders. The softer dollar and the selloff in stock markets is keeping demand for gold high. While the metal holds above the support level $1164 further gains are possible and $1183 is the next major resistance level.

The oil market has taken a negative turn and while US crude is sub $32.40 and Brent is under $34 we could see further losses. 

FTSE 100 risers and fallers (as of 10am)

Company % change Index points
Randgold Resources Ltd +2.64 +0.50
Rio Tinto +2.17 +1.88
Fresnillo +1.4 +0.07
easyJet +0.2 +0.02
SABMiller +0.17 +0.25

 

Company % change Index points
ARM Holdings -5.54 -2.98
Hargreaves Lansdown -4.34 -0.44
London Stock Exchange Group -4.27 -1.19
Wordplay Group -4.24 -0.51
Ashtead Group -4.13 -0.72

 

The day ahead

Corporate reporting

US: Coca-Cola Co, Twenty-First Century Fox Inc

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