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Trader Talk: An Analysis of the Markets

U.S. stocks fell on Tuesday following a sell-off, with major indexes hitting session lows in afternoon trading. The retail sector led the losses after disappointing results from a number of companies including Staples and TJX Companies amongst others. All 10 primary S&P 500 sector indexes fell, and nearly three-fourths of Nasdaq-listed names were down for the day.

For the fourth straight session, the number of Nasdaq-listed companies hitting 52-week lows – 55 – exceeded the number hitting 52-week highs – 38. More than two-thirds of stocks traded on the New York Stock Exchange declined. Analysts pointed out that yesterday’s market outcome could have been a reaction ahead of the Fed minutes of today whilst traders could have adjusted their positions ahead of the long weekend.

Asian shares followed suit on Wednesday with major indices ending the trading session lower. The dollar was on the losing end for the sixth consecutive session against the yen after the Bank of Japan upgraded its view on capital expenditure. Against this backdrop, European indices have opened flat this morning.

Meanwhile on the local market yesterday’s session counted 121 trades generating a volume of 1,440,585. The index fell 0.45% to 3407.906. The catalysts for the drop were BOV, Fimbank and HSBC after all stocks saw a drop in price. BOV dropped 0.94% to 2.110 with 22 deals and a volume of 124,845.69. HSBC fell by 0.90% to 2.091 with 6 deals valued at 18,873. Fimbank fell to a price of 0.77, equivalent to a 1.28% drop. Lombard gained 1.34% ending the session at a price of 1.510. Middlesea, GO, MIA and RS2 remained unchanged by close of session.

Elsewhere, during a meeting in Shanghai yesterday, the presidents of China and Russia failed to sign a $400 billion gas supply agreement, which means that the 10-year long negotiations are expected to be stretched further. Talks are continuing as the two countries are trying to seek an agreement after a bi-lateral agreement between Putin and Xi Jinping signed yesterday did not include the gas deal. Russian officials said before the meeting that the two sides were very close to a deal on gas price, opening the way to building a pipeline linking the world’s largest energy producer with the biggest consumer. Meanwhile, Australia has expanded its sanctions on Russia, and is now expected to target 50 Russian and Ukrainian individuals, up from the 38 people covered under the initial sanctions were announced a couple of months ago, whilst a number of entities will also be targeted.

Moody’s changed its outlook for Chinese property developers to Negative from Stable, on the back of a slowdown in sales growth, which trend is expected to persist, whilst refinancing risks are also expected to emerge as banks tighten lending. Despite a slowdown in the Chinese real estate sector, Chinese job creation continues to be strong as China created 4.7 million urban jobs, roughly the same number as in 2013.