The Standard & Poor’s 500 Index fell the most in six weeks over the past 3 sessions.
The Treasury’s new rules on inversions apply to deals that close starting yesterday. The changes will have the biggest effect on the eight U.S. companies with pending inversions, including Medtronic and AbbVie. Alibaba fell 1.9 percent to $88.24. Treasuries gained with oil futures amid airstrikes in Syria.
Equities: The E-mini S&P 500 (CME:ESZ14) futures are down 4 points to 1982.25, after a brief morning rally to 1988. 1993 is our first key resistance level, and our next major target which we believe will be hit is 1971. We believe the market may head below there soon as the tax inversion rules coupled with airstrikes starting in Middle East could start to worry investors. Technically, we believe the market has more room on the downside to run lower.
Bonds: The 30-year bonds are up 11 ticks to 137’03, after failing to hold below 136. We would not be surprised to see the bonds continue to find a bid, especially if the SP500 heads lower. We have called previously for bonds to head lower, however geo-political events such as airstrikes beginning in Syria could cause a classic safe-haven bid.
Currencies: The Yen has been in an amazing slide recently, trading down to 91.86 vs the USD today. The USD is down 10 ticks to 84.77, hitting an overnight low of 84.46. It seems as though all dips on the USD are being bought in this environment. The DEC14 Aussie Dollar has also been sliding a lot, breaking below 88 this morning. USD strength seems to be the main story of the FX markets.
Commodities: Commodities apparently been greatly affected by USD strength, as the precious metals as well as energy sectors have been sliding. However, today one commodity is having a major rally, and that is RBOB gasoline (NYMEX:RBV14). It is up around 2% today. Gold (COMEX:GCV14) is up $5 to $1,222. Our key support level which gold briefly hit is $1,210. Grain markets have been extremely weak recently and today is no different. Corn, wheat, and soybeans are all down today, and it looks like the market is not concerned at all with the supply of grain.