Spreadex Market Update
Volkswagen scandal leaves auto sector running on fumes; US indices suffer same fate as Europe
The Dow Jones dropped by the 190 points the futures had suggested, as Ford (down 3%) and General Motors (down 2.7%) joined in with the auto sector sell-off that began in the wake of Volkswagen’s shameful emissions-deceit admission. This limp start to the American session meant that the FTSE, DAX and CAC all saw no change to their own hefty declines, with Volkswagen and Porsche (both falling by nearly 17%) joined by Fiat Chrysler (down 5.6%) and Daimler (down 6%).
The VW story looks set to dominate the week, with fervent speculation that CEO Martin Winterkorn will be forced to step down (even if Volkswagen swiftly denied said rumours), and increasing calls from politicians the world over for a full scale investigation into VW’s malpractice. The big (and sell-off fuelling) question, however, is if a company the size of Volkswagen can attempt such deception, who is to say it isn’t a practice widely spread through the automotive industry?
At least Wednesday brings with it some investor-distracting data, even if what is on the cards has the ability to disrupt the markets further. First up is the Caixin flash manufacturing PMI for China, a figure that could spook an already shaky commodity sector AND bring about the kind of investors-scaring slump in the Shanghai Composite that was so prevalent in August. The manufacturing data for Europe and the US will then provide further insight into the state of the economy in each region, whilst Mario Draghi will likely be peppered with questions about the impact of the VW situation on the Eurozone economy at his press conference tomorrow lunch time.
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