Daily Analysis – 3rd Quarter Ends on Weak Note

Asian markets traded mixed ahead of significant Chinese PMI data, due to be released over the weekend.  The Nikkei, ASX 200  and Kospi all closed flat, while the Shanghai Composite slipped .3% to 2359.  Hong Kong’s Hang Seng slumped 2.3%, as numerous Chinese mainland banks listed in Hong Kong tumbled more than 7%.

European indexes closed significantly lower, ending a difficult quarter on a somber note.  Germany’s DAX sank 2.4%, the CAC40 fell 1.5%, and the FTSE closed down 1.3%.  For the quarter, the DAX and CAC40 tumbled 25%, while the FTSE shed 14%.  Inflation data from Europe showed annual consumer prices jumped 3% last month, more than the 2.5% expected.

The selling pressure continued in the US, sending the Dow down 241 points to 10913.  The Nasdaq fell 2.6% and the S&P 500 dropped 2.5%, as the VIX jumped 10.6% to settle at 42.96.  For the quarter, the major indexes were down between 12 and 14%.

Kodak’s freefall continued, as shared plummeted 54% to .78 on growing expectations the company will file for bankruptcy.  Chip-maker, Micron Technologies, sank 14% after reporting a loss, and Ingersoll Rand dropped 12% after cutting its earnings outlook.

Currencies

The US Dollar rallied sharply, particularly against the Euro, which fell 1.4% to 1.3388.  The Canadian Dollar skidded 1.2% to 1.05, and the Swiss Franc dropped 1.1% to .9078.  The Australian Dollar fell .9% to .9705.  The Pound and Yen declined modestly, shedding .2% and .3% respectively.

Economic Outlook

Friday’s data had some bright spots, but investors failed to notice.  Chicago PMI rose to 60.4 from 56.5 last month, well above expectations.  University of Michigan consumer sentiment was revised upwards to 59.4, better than the 57.9 forecast.

Monday’s reports will include the ISM manufacturing index, construction spending, and auto sales.  No major earnings reports are due.