Daily Market Review 24.08.2015

STOCKS 

Apple Slides into Bear Territory: On Friday, the stock of Apple Inc. (AAPL, -6.12%) dropped 5.9 percent and as such, the tech giant slid into bear market territory for the first time in over 2 years. Apple’s stock closed at $106.05 a share which was 20.3% below the company’s record close of $133 which it reached on the 23rd of February. A bear market can be defined as a decline of 20 percent or more from a significant peak. According to FactSet, during the recent decline of Apple’s stock price, the company has lost $153.69 billion in market capitalization. Apple was last in a bear market when it dropped 44 percent from the split-adjusted closing peak of $100.30 which it reached on the 19th of September 2012 to the close of $55.79 which it reached at the close of trading on the 19th of April 2013. On Friday last week, Apple shares slid into bear territory after the share price dropped more than 21% from the high of $134.54 which it reached on the 28th of April. Apple has now joined 9 other components on the Dow Jones Industrial Average (DJIA) which are already in bear market territory such as IBM, Exxon, Proctor & Gamble, Chevron, Wal-Mart, Caterpillar and DuPont.

INDICES

In U.S. trading on Friday, stocks traded lower sending the Dow Jones Industrial Average (DJIA) into correction territory. This decline came about as a result of investor fears regarding the economy in China as well as economic growth globally and as a result, a heavy selloff was prompted. On Friday, the main benchmark indices posted massive one-day selloffs as well as their biggest weekly declines in nearly 4 years. At the close of trading, the DJIA declined 3.1%, or 530.94 points, to 16,459.75. This left the blue chip index more than 10% down from its record close in May. As a result, the index reached a correction and for the week, the Dow declined 5.8 percent which marked the steepest decline since September 2011. Also on the downside was the Nasdaq Composite index (COMP) which dropped 3.5%, or 171.45 points, to 3.5%. For the week, the tech heavy index declined 6.8% which marked the biggest weekly decline since August 2011. Following the downward trend was the S&P 500 index (SPX) which declined 3.2%, or 64.84 points, to 1,970.89. This declined pushed the SPX below 2,000 for the first time since February and losses were led by technology, energy and consumer discretionary stocks. For the week, the S&P 500 declined 5.8 percent which marked the steepest decline since September 2011 while the main benchmark also wiped out $1.1 trillion of its market value over the week.

CURRENCIES

In currency trading on Monday, the safe haven Japanese yen (JPY) gained. This came after the Shanghai Composite index declined while uncertainty regarding further monetary easing in China remains. The USD/JPY traded down 0.97%, at 120.87 while the AUD/USD traded down 1.29%, at 0.7218. Meanwhile, the EUR/USD traded at 1.1486, up 0.90 while the NZD/USD traded down 1.32% at 0.6597. The Nikkei 225 was down 3.21% while the Shanghai Composite index fell more than 7%. Also on the downside was the S&P/ASX 200 which eased 3.14% while the Hang Seng index in Hong Kong was off 3.65%. Last week, the U.S. dollar declined by more than 1% against the euro and the Japanese yen. This came after weak factory data from China added to concerns regarding a slowdown in global growth which also then added to concerns that the Federal Reserve may delay hiking interest rates. Meanwhile, the U.S. dollar index traded steady at 94.84.

COMMODITIES

In early Asian trading on Monday, crude oil prices dropped sharply. This came as investors shifted their focus to China, with the Shanghai Composite down more than 7 percent. WTI crude oil for delivery in October traded at $39.57 a barrel, down 2.18%, on the New York Mercantile Exchange. Later today, the President of the Federal Reserve Bank of Atlanta, Dennis Lockhart, is expected to speak and his comments will be closely watched. Meanwhile, on the ICE Futures Exchange in London, Brent crude for delivery in October traded at $45.46, down 2.49%, or $1.16 for the day. During the trading session, the contract dropped to a session low of $45.07 a barrel which marked the weakest level since March 2009. For the week, London-traded Brent futures lost 7.58% or $3.30 which marked the 8th straight weekly decline.

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