(Posted Singapore time 430 am)
Global markets fell Thursday from Asia to US closing.
The volatility index, CBOE VIX surged from early 30s to mid 40s. If you are using VIX as a tool to trade, be very cautious when it reaches 50. The weather has changed for the worst. I would suggest not holding positions over this weekend.
China manufacturing data came in weak. Coupled with a decline in Europe’s private sector activity, the preliminary EZ composite PMI dropped to 49.2 pointing to its first decline in two years. These two data just seal another nail to the coffin.
Before US closing, Wall Street fell 4%, was down more than 500 points at one stage, broke the 10,600 level before bouncing back up (10750).
The primary beneficiaries this week are Treasuries and the US dollar reaching a high of 79.4 before reversing course to 79 figure.
Gold dropped more than US 60 before settling around US$ 1,735. Gold, which has the characteristics of a safe haven, was not spared. Speculators changed course when the US dollar was charging towards the figure 80. I do not fore see that Gold speculators will push Gold towards US$ 2,000 unless QE3 is annouced. Silver was not spared dropping almost 10% before closing around 35.80.
With weak global concerns, crude oil drop more than 6%, broke US 80 before finding a base around 80.30. A cheer to pump pricing!
Commodities currencies like the Aussie dollar which normally moves in tandem with global equities sank almost 3% and hit a low of .9692 before bouncing back to 0.9760s.
However, I have a strange feeling that the calvary lead by Bernanke would make a surprising announcement very shortly!
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