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Late September seems to have much in common with late August – namely disappointing weather and stock market sell-offs. This time round, however, there is no specific cause which can be blamed.
Throughout the month, the inability of indices to hold rallies showed that buying pressure is weak, and a combination of a fairly cautious Fed last week, plus the travails of Volkswagen and comments from a key stainless steel producer in Finland have provided the fuel for the FTSE 100’s latest slump. This has pushed the index to new lows for the month, with eurozone indices following suit. US markets are being sold just as heavily, as buyers search in vain for reasons to be positive.
Once again, the index’s position as a hub for global commodity firms is proving its undoing, with major names such as Anglo American and Antofagasta losing more than 6%. Bottom of the class once again is Glencore, down another 11%.
Raw materials have been hard hit too today, and although Chinese manufacturing PMIs are out tomorrow, it will take a very strong reading on the positive side before any rebound in prices can be contemplated.
Faced with further problems at Volkswagen, investors have decided that the prudent thing is to move funds from automobile manufacturers as quickly as possible, pulling the rug from underneath such firms as Peugeot and BMW, as well as major names on the other side of the Atlantic. Volkswagen may be an isolated case, but knee-jerk reactions are strong today, with investors minded to sell first and ask questions later.