Spreadex Market Update
Heads begin to roll at Volkswagen as auto-sector sell-off continues to take its toll
Losses for BMW (which has vociferously denied accusations of an emissions deceit akin to that of VW), Daimler and Continental, and the return of negative sentiment surrounding Volkswagen and Porsche’s stocks, pushed the DAX 200 points lower to below 9400. That is only marginally above the 2015 intraday nadir the stock hit at the peak of August’s China crisis, in a sign of just how disastrous this scandal could be for the German economy as a whole. In terms of VW itself, reports suggest that the R&D heads of Porsche and Audi, Ulrich Hackenberg and Wolfgang Hatz respectively, and US chief executive Michael Horn, are set to be dismissed as heads begin to roll in the wake of Martin Winterkorn’s departure.
The FTSE had a similarly dismal Thursday afternoon, dropping 60 points to fall below the 6000 mark the index has been continually drawn back towards in the past month. The main culprits for the decline were, as usual, the FTSE’s mining stocks, joined after lunchtime by an equally awful showing from the oil sector. Matters were made worse by widening losses for Poundland, after the company’s cautious profits outlook this morning, and another 18% plunge by Allied Minds, following Tuesday’s 15% decline inspired by bearish comments from hedge fund Kerrisdale Capital.
With a miss in core durable goods orders countered by a solid jobless claims figure and a rise in new home sales, the Dow Jones soon dropped by 200 points after the bell, not helped by tumbles for General Motors and Ford. A speech from Janet Yellen could introduce some market-boosting clarity; then again, given the nature of her recent Fed statements, it might not. Arguably more important will be Nike’s after hours fiscal first quarter release, giving investors the first chance to assess the impact of the stronger dollar and the recent Chinese chaos on a major US multinational ahead of the latest earnings season.
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