Glencore's fall kicks off a bad session across Europe and the US, ASX futures down 104 points

The ASX will open at the bottom of its range today, thanks to falls of up to 3% in the US and Europe. As stated yesterday, it is fruitless for investors to search for fundamental economic reasons to explain market positioning at present, so I do firmly encourage that those who are looking to make sense of short-term movement click here to take up a Rivkin Global membership. Rivkin Global members, who can take positions that benefit from falling markets, are sitting on a 6% open profit on a short NASDAQ position, which led the falls on major global equity indices last night. US tech stocks have been exponential in their rise since the GFC recovery and thus when risk is removed from markets, stocks listed on this index are among the first to be cut down to size due to their extreme valuations.

In today's first chart I've updated the ASX 200 cash index futures market from the Rivkin Trader platform, which continues to show the 5,000 level holding up for the time being. Today's second chart shows the NASDAQ 100 index taking a step back from its stratospheric rise over the last six years.

Today's last chart shows Glencore PLC (GLEN) in orange falling significantly over the past six months, with selling intensifying last night. The market is concerned that the uncertainty of future commodity prices isn't being addressed at an appropriate pace in the context of GLEN's debt, with CEO Ivan Glasenberg announcing the debt reduction plan just three weeks ago. GLEN fell from GBP 97.22 to 68.62 last night, a 29.4% drop which shaved billions from its market cap. I have also plotted (in black) the CRB ETF, which tracks the CRB commodity index, and shows that while GLEN followed the trend in commodity markets closely up until August, it has now taken on a new trend of its own that is tied to its balance sheet dynamics.

ASX futures have witnessed a fairly deep turnaround, given the positive run we had during yesterday's day session - in the context of yesterday's 71 point rise, we're only down 33 points since Friday's close based on the overnight futures price. So the reaction on Australian markets doesn't look to be too extreme at all - let's see whether we hold the 5,000 level today.


Source: Rivkin, Saxo Bank

To view the Rivkin economic calendar and Global Markets matrix, members can click here.

This article was written by Scott Schuberg, CEO of Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3600.

Complex product warning

This article contains information about foreign exchange contracts, which are considered complex financial products. Please click here to read ASIC's foreign exchange trading article before considering an investment in foreign exchange contracts. 

This article contains information about CFDs, which are considered complex financial products. Please click here to read ASIC's "Thinking of trading contracts for difference?" document before considering an investment in CFDs.
comments powered by Disqus

DISCLAIMER: Rivkin aims to provide clear and simple information to those visiting our website. If any part of this disclaimer does not make sense, please phone Rivkin and ask to speak with a member of our Dealing and Relationship Management Team. Rivkin provides general advice, securities and derivatives dealing services and accounting administration services. Rivkin does not provide advice that takes into account your, or anybody else's, investment objectives, financial situation or needs. We strongly suggest that you consult an independent, licenced financial advisor before acting upon any information contained on this website. Investing in and trading securities (such as shares listed on the ASX) and/or derivatives (such as Contracts for Difference or 'CFDs') carry financial risks. CFDs carry with them various additional risks that differ from more simple securities such as fully-paid company shares. Some of these risks include not owning the underlying instrument from which a price is being derived, settling trades 'over the counter' with a financial institution rather than on a stock exchange, and using leverage to gain access to trades that may have a higher face value than your initial deposit. This risk of leverage means that it is possible to lose more than your initial investment. Our aim is to create more life choices for our clients, which means improving the wealth of clients throughout many market cycles by nurturing a relationship spanning many years. If you are not comfortable with your understanding of the risks involved before using a Rivkin product and service, please contact our office to seek further information or a Product Disclosure Statement, or make an appointment to sit with one of our friendly financial experts. It is in our interest for your Rivkin experience to be a rewarding and comfortable one. Rivkin is a trading name of Rivkin Securities ABN 87123290602, which holds Australian Financial Services Licence No. 332 802.