zerohedge.com / by Tyler Durden / 09/22/2015 06:49 -0400
While Asian trading overnight started off on the right foot, chasing US momentum higher, things rapidly shifted once Europe opened as attention moved back to global growth fears, contradicting central banks losing credibility, as well as the miners with copper sliding back to a 2 week low, and the ongoing Volkswagen fiasco.
The first sign that not all is well was the latest plunge in Glencore shares tracking the recent selling in copper which two weeks after a “doomsday” capital raise, has once again crashed to fresh all time lows, down 10% on the session, and down 80% since the 2011 IPO. GLEN CDS, as we predicted 2 weeks ago, is back over 400 bps.
The general risk off tone was exacerbated by a steep selloff in the all important carry pair, the USDJPY, which plunged just as Europe opened, and has been trading below 120 for the past several hours, in turn pushing both the EuroStoxx and E-minis well lower.
But the knockout punch came just under an hour ago, when Volkwsagen – already the focus of everyone’s attention – announced it plans to set aside 6.5 billion euros ($7.3 billion) in the third quarter to cover the costs of addressing irregularities in diesel engines installed in 11 million vehicles worldwide, as the scandal that started in the U.S. widens. “Volkswagen is working at full speed to clarify irregularities concerning a particular software used in diesel engines,” the Wolfsburg, Germany-based company said in statement. The manufacturer said it will adjust its earnings forecasts for 2015 accordingly. VW shares plunged for a second day after the announcement.