Wall Street tumbles on concerns over the economic recovery with the financials leading the drop.
- The Dow Jones industrial average suffered its worst slide since July closing the month of October at 9712.73, falling 2.51% in one day. The VIX index soared 24%, its biggest one-day percentage gain since October 2008.
- Citigroup fell 5.1% to $4.09 after accounting expert Robert Willens, an independent consultant, said the bank was likely to have a $10 billion fourth-quarter charge on its deferred tax assets. CIT group, filed for bankruptcy on Sunday, as the global financial crisis left it unable to fund itself and the recession clobbered its loans.
- US Consumer Spending fell 0.5% according to the US Commerce Department for the month of September - the largest single month fall in nine months. Even though the overall economy grew in the quarter ending in September, consumers cut back as government spending programs and other initiatives wound down. US consumers are still facing continuing unemployment and a growing foreclosure rate and this is causing an increasing fear of a double-dip recession.
- The unemployment rate in the Eurozone jumped to 9.7% in September bringing the total number of unemployed people in the Eurozone to 15.3 million. The EURUSD fell almost 200 pips from Friday's high, to a low of 1.4682.
- Today the euro rose to a high of 1.4780 in the Asian session against the dollar and the yen on the improved outlook for the Chinese economy and its stock market. The Australian dollar reversed declines against the greenback after futures signaled US stocks may recover from their biggest weekly slump since May. Australian's government said today the nation's economy will expand 1.5%, compared with a May prediction of 0.5% contraction, in the 12 months ending June 30, 2010.
- Crude oil remained weak in the opening session for this month and currently trading around $77.50 a barrel. Gold edges slightly higher after falling to as low as 1035 on Friday, its appeal as a safe-haven may return amid the bankruptcy of CIT group; 101-year-old commercial lender.
Currency to watch out for: EURUSD & GBPUSD
- The EURUSD pivot point is at 1.4715 with a preference to enter into long positions at 1.4725.
- The GBPUSD pivot point is at 1.6400 with a preference to enter into long positions at 1.6410.
Today's calendar and market movers:
- EU Final Manufacturing PMI expected to rise to 50.9
- UK Manufacturing PMI expected to rise to 50.1
- US ISM Manufacturing PMI expected to rise to 53.1
- US Pending Home Sales month on month expected to drop to 0.2%
- US equities end Friday's session lower with the Dow and the NASDAQ -2.50% and the S&P 500 -2.81%
- As of 06:45 GMT the Nikkei is trading at -2.31% and the Hang Seng -1.18%