Running Commentary on the SP Movements., page-13932

Its best not to make things up as you go.

MARKET WRAP
Not for the faint hearted the moves witnessed today, with our market accelerating to the downside during today’s session closing down a meaningful 3.2%. Losses are contagious with moves of 6.5% in Japan and 5% in Hong Kong of particular note in our time zone. These moves are mirrored in the US with the DOW futures currently down over 1000 points.

Interestingly, however, bonds are rallying. This is of note given equity markets have fallen on a bond market sell-off. Flight to safety or another overreaction? Our strategist has been calling the move technical on account of the extended period of low volatility and sighting the fact that the fundamentals from a bottom up perspective have not changed. Furthermore, global growth has been accelerating, typically a welcome tailwind for equity markets.

From a sector perspective, energy and IT were the hardest hit. Energy following oil markets lower overnight and IT reversing some it’s its significant multiple expansion under a low interest rate environment. In a move reminiscent of ‘the tallest of seven dwarfs’, the resource sector was the best performer losing a relatively meagre 2.5%. Quite the sombre tale I’m afraid today.

GOLD features among the best performers here today which can be explained via an inflationary hedge and/or a flight to safety. WGX and HTA also featured in what is otherwise a short list. AGLHA is not far from the top today highlighting the broad based sell-off.

The losers column was filled with tech names featuring UPD, WTC and BIG. High PE’s should be avoided in a rising interest rate environment as multiples will compress.

Commodities held gains experienced overnight though Asia today generally and the AUD is slightly softer against the Greenback, currently trading US$0.7853.