Major Events of Last Week
Last week ended in a turbulent fashion exemplified by the financial markets suffering severe losses. A number of major bearish catalysts emerged including disappointing US corporate earnings, better-than-expected US economic data, new Chinese regulations and fresh Greek debt uncertainties. Prominent analysts summarized these dramatic developments by stating that investors will now have to quickly re-assess their risk exposure after enduring such a direct hit. For instance, they will need to determine whether the markets will now undergo a significant reversal or just a temporary correction. The leading US indices tumbled last Friday demonstrated by the Dow Jones Industrial Average crashing by just over 275 points; the S&P500 dropping by nearly 24 points and the NASDAQ plunging by practically 76 points.
The US Department of Labor published a key inflationary indicator last Friday disclosing that its Consumer Price Index (CPI) increased during March by 0.2%. Although this result missed economists’ predictions of 0.3%, it still helped fuel the on-going debate about when the US Federal Reserve will most likely instigate its first interest rate hike since December 2008. This is because the CPI is one of the key parameters evaluated by the Fed when determining its future guidance policies.
Global equities came under sizeable pressure after a spate of US companies posted disappointing earnings reports for the first quarter of 2015. For instance, Honeywell witnessed its shares slumped by 1.6% while those of American Express crashed by 4.3%. Both firms blamed the strong dollar for their poor quarterly performances. Analysts were quick to stress that these results definitely indicate that investors must now start focusing their attention on business fundamentals as opposed to the monetary easing deliberations of international Central Banks.
The release of a Chinese report divulging a major crackdown on margin lending also subjected the world’s financial markets to conside