2:00 PM PT: Major markets at support, Small-caps continue slide.
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Weak Japanese internal data overcame the strength in exporters and the Nikkei 225 closed lower. The unrest ahead of a national holiday in Hong Kong pushed prices there down an additional -1.28%, while other Asian markets were narrowly mixed. In Europe, lower than expected CPI added to calls for ECB stimulus and markets there were higher. UK markets were easier on lower consumer confidence and home prices.
US markets headed into the open following Europe higher, but data here was universally disappointing. The July Case-Shiller 20-city Index was +6.7% vs. +7.4% expected. September Chicago PMI was 60.5 vs. 61.5, and September Consumer Confidence was 86 vs. 92.
The US$ moved higher and commodities, including gold and crude, were under pressure, with gold set to test $1200 and crude ready to test $90. 10-Year Note yields were steady at 2.5%. After sinking on weak US data, markets staged their typical morning rally before concerns over the commodity sector and US$ strength eroded the gains and sent markets to new lows before recovering late. At the close, there was a significant divergence with major averages at or above support, while the small-cap Russell broke sharply lower through the early August lows.