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Current Futures: Dow -61.00, S&P -7.30, NASDAQ -13.50
Asian markets and U.S. futures declined at a strong pace on Sunday, as investors are having doubts about the much-awaited global recovery.
Commodities dropped at an increased pace over the last few days of trading, especially oil which lost almost $8 over the last four days of trading. This has caused the heavy-weighted raw material companies to post important declines in the regional market indexes, declines that affected the market as a whole. In addition, the declines seen in the Asian and the S&P futures markets sent the currency market into a risk aversion mode, which in turn sent the yen higher against the other major currencies shortly after the Sunday open.
A stronger yen is usually seen as negative news for the Japanese economy, since it reduces the exporter’s profitability. More importantly, a stronger yen reduces the nominal and real value of assets, something that is unhelpful since the Japanese economy is fighting deflation – falling asset prices – for more than a decade, TheLFB-Forex.com Trade Team said. As a note, these long deflationary periods are very dangerous for consumers and for the real economy.
Further downside action came on Sunday night in the Asian region after it was announced that, North Korea fired seven missiles into the Sea of Japan on Saturday. North Korea is a major de-stabilization factor in the Asian region, and the fact that it recently tested a nuclear bomb only makes things much worse.
Overnight, the Japanese Nikkei declined 154.80 points (1.58%) to 9,661.27. The Australian S&P/Asx lost 49.20 points (1.29%) to 3,779.00
Crude oil for July delivery was recently trading at $65.10 per barrel, lower by $0.60. Oil declined even from the first few hours of trading on Monday.
Gold for July delivery was recently trading lower by $1.00 to $930.20. Gold might find relative strong support around the $927 area later in the day.
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