Just when it looked like the momentum was picking up, yesterday came a bad blow from the global markets. The US markets sold off quite dramatically overnight. The Dow Jones was down 250 points, one of the biggest seen in recent days.
That pegs us back today once again as the economic data from the US has failed us. We have to see whether we can preserve some of the gains of yesterday on a weekly closing or we get pegged back right into that trading range again, said Udayan Mukherjee, managing editor, CNBC-TV18.
The US manufacturing data and the economic data is disappointing. That is not good news because we have just come out of a Fed meeting. The Fed said that it will hold its fire power for sometime till things warrant a QE3 and immediately after that we have seen the economic data worsen quite a bit. Also the Moodys downgrade of many banks did not help yesterday at all.
For the last few weeks and days we have all been freighting about Europe and the risks from the Europe, but now if it is presented to the market that the US will weaken and the S&P starts fading from that 1,350 level from which it dropped 30 points yesterday and goes in for a medium-term correction, then global markets might struggle a little bit in the near-term. So it is a one day sell-off prompted by data so it is premature to take that call, but it certainly looked difficult the way the data came out yesterday.
Also the currencies have not moved in the direction that equity markets would have liked. The dollar index respite all hopes of QE3 has now gone back to 82.25, which is what the markets would not have liked to see. The euro made a brief attempt to 1.27, but has come back once again to 1.25. These are not good for equity markets per se.
But let us see if yesterday was a savage sell off, if it was a one day or two day kind of sell off and whether today the euro meeting throw up something on the ESFS use front which the markets might like. There is too much news