Asian equity markets are trading sharply lower across the board in the wake of a Friday sell-off on Wall St., where a week of disappointing consumer sentiment and retail sales has forced investors to recalibrate the slope of US economic rebound. In spite of Japan emerging out of a year-old recession with a positive Q2 GDP, Nikkei225 has shed over 2.5%, with decliners led by financials, tech, and energy sectors. S&P/ASX is off by 1.8% on a selloff in materials following limit-down trade in Shanghai Copper and Foreclosure price deal with China. Shanghai Composite has also extended its August slump with another 3% selloff, while Korea’s Kospi is off by % and Taiwan’s Taiex is down by %. Ahead of the Monday open in the US, front-month S&Ps are down about 0.7% below $1,000.
The last time the market opened down this much, the S&P closed down almost 3%, we’ll see if that holds true here. Materials are getting hammered as the risk trade is off and the flight to safety trade is on. Sloppy retail sales, lacking consumer confidence and the failure of Colonial Bank I’m sure is the catalyst.
As I said Friday and on my weekend links Saturday, we’ll find out today if it is still a buy the dip market. I think we’re out of catalysts near term. The money in this market isn’t sticky money in my view, and based on that can hit the exits fast.
Let’s see if they buy the dip later and shake it off. God luck today.