Asia Pacific Market Open – Caterpillar Inc., Crude Oil, S&P 500, Risk Trends
- S&P 500[1] followed Nikkei 225[2] lower despite Caterpillar Inc. CEO calming investors after earnings
- Crude oil[3] clocked in the worst day since 2017, risking reversing the dominant uptrend since then
- Asia Pacific equities may pause for corrective gains after aggressive declines, but remain vulnerable
We released our 4Q forecasts for Crude Oil in the DailyFX Trading Guides page[4]
As expected[5], the aggressive selloff in Asia Pacific benchmark stock indexes echoed into both the European and US trade. The DAX[6] and S&P 500 tumbled 2.17% and 0.55% respectively as US government bond prices rallied, signaling a flight to safety. However, there is a slightly different story for the latter which began with a gap to the downside as an earnings report from an economic bellwether crossed the wires.
Caterpillar Inc., despite having earnings that surpassed economists’ expectations, initially plunged 7.7 percent to its lowest since September 2017. This followed the company citing concerns about rising raw material costs given higher tariffs amidst US trade wars. Then, the general deterioration in market mood was lifted as Caterpillar’s CEO Jim Umpleby spoke around 15:00 GMT.
The CEO offered reassuring commentary, noting that many of their end markets continue being strong and are in the early stages of recovery. It appeared to work, Caterpillar’s stock as well as the S&P 500 began paring losses, but not enough to fill their gaps. With that in mind, the anti-risk Japanese Yen[7] gave up some of its gains while the pro-risk Australian and
