FANG Stocks Suffer Large Falls

The Dow Jones was the only of the three major indices to close higher overnight. The S&P 500 was virtually flat while the Nasdaq 100 was down 1.7%. Netflix (NFLX) was down 5.5% while Facebook (FB) was down 4% leading the FANG stocks (Facebook, Apple, Netflix and Google) to have their biggest intra-day decline in 22 months. Although today’s falls were large, the one year returns on these stocks is very high. NFLX, for example, is up 60% over the past year.

Gold prices dropped overnight with most of the fall occurring shortly before the open of the US trading session. Although there was no proximate cause for the fall, prices certainly weren’t helped by the upward revision to US GDP. The Aussie dollar price of gold has fallen back through $1,700 per ounce but is still up near six-month highs.

US crude oil inventories were released last night which showed a large crude drawdown although this was offset by a build in gasoline inventories. The crude market is currently fixated on the outcome of the OPEC meeting which is currently ongoing. The current consensus is that members will agree on an extension to the production cuts but the duration of the extension is uncertain.

As mentioned above, the second revision of US third quarter GDP came out last night and was revised up to 3.3% from 3.0% as expected. This represents the highest growth rate so far this year and strengthens the case for a December rate hike. Today Australia’s private capital expenditure data for the third quarter is released. 

Data Releases:

–    AU Private Capital Expenditure 11:30am AEDT

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This article was written by William O’Loughlin – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via william.oloughlin@rivkin.com.au or by phoning +612 8302 3633.