Europe ends in the red, S&P enters correction territory

The bloodbath continued with markets across the globe slamming lower as concerns over US corporate results overshadowed a robust US GDP figure.

The large-scale volatility that we have seen across the week was certainly not packing away for the weekend early. The bloodbath continued with markets across the globe slamming lower as concerns over US corporate results overshadowed a robust US GDP figure. Heading into the close in Europe, the CAC was down a hefty 2.4% and the FTSE and the Dax 2.1% . Losses for the week on the FTSE totaled over 2.5%, whilst losses for the month the UK index is facing an 8.5% decline.

The stats are equally horrific in the US if not worse, with the S&P entering correction territory, down 10% from its September high. The Dow, was down a further 450 points, totaling 7.5% loses for the month to date. Meanwhile the Nasdaq has shed over 11.5% in October as traders act on concerns over valuations.

Tech stocks disappoint
Disappointing results from key tech stocks sparked the selloff this time, as we saw with disappointing figures from Caterpillar and 3M earlier in the week. Amazon and Alphabet both beat on earnings but underwhelmed on revenues causing already jittery investors to whip risk of off the table ahead of the weekend. Expectations were high going into this earning season and the darlings of Wall Street, so far, just haven’t been able to live up to the high bar. Amazon’s forward guidance was surprisingly light.
Investors see the softer earnings figures as confirming their fears. Concerns that rising inflation, rising interest rates and slowing global growth will start trimming US corporate profit expectations are kicking in. 

Market shrugs off upbeat GDP figures
The fact that the market as good as shrugged off better than expected US GDP figures suggests a level of blind panic is starting to kick in. US economic growth of 3.5% in Q3 is nothing to be smirked at, even if it was down from 4.2% in Q2.  Yet these figures mask the biggest concern which is the coming quarters and year ahead. There is a growing sensation that the peak has been reached and with headwinds building, the future is not looking so rosy. 

US Consumer confidence, as measured by the University of Michigan Confidence, slipped in October. The figure was weaker than expected at 98.6, although it still remains close to historically high levels. The index reached its highest level since 2004 in March and has been steadily declining since. The dollar dipped marginally on the news, although has found support at 96.5 close to its two-month high.


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