urope
By-and-large European stock markets are strong as the bullish sentiment is still doing the rounds. Seeing as the destruction caused by Hurricane Irma wasn’t as bad as investors were expecting, the rally that started yesterday is still going.
A stalling of tensions surrounding North Korea is also adding to the positive mood. The nation celebrated the anniversary of its founding over the weekend, and it passed without the country antagonising its neighbours. There was talk of a missile being tested, but it never materialised, and it enticed traders to buy into stocks.
The FTSE 100 saw small gains in early trading, but the jump in sterling on the back of UK inflation data triggered a round of selling, as the strong sterling hurt the international index.
US
US equities are in positive territory as the global bounce back continues. Traders are content to take on more risk now that geopolitical and environment fears have waned.
The S&P 500 hit a record high in early trading, and the Dow Jones and Nasdaq 100 have their respective all-time highs in sight. As major indices approach all-time highs, the levels can often act as a magnet for the market.
Goldman Sachs (NYSE:GS) shares are up 2% after the bank reported plans to ramp up revenue, and particularly at the fixed income, currencies and commodities (FICC) division. One of the aims to become less reliant on hedge funds by capturing a wider range of clients, and bringing in new trading staff. The announcements come after the Wall Street titan had a couple of poor quarterly performances.
FX
The GBP/USD hit a one year high today as the stronger than expected inflation figures from the UK prompted buying. In August, the British CPI number came in at 2.9%, and traders were expecting a reading of 2.8% - the July rate was 2.6%.
The pop higher in inflation will make for an interesting Bank of England (BoE) meeting on Thursday. The market isn’t expecting any change in the monetary policy, but it is pencilling in for two BoE members to vote for a rate hike.
The EUR/GBP saw a severe sell-off today due to the spike in UK CPI. The currency pair traded below 0.9000 – a level not seen since early August. The British inflation data gave traders who were predicting parity for the euro versus the pound something to think about.
The EUR/USD is flat on the day as we have seen the US dollar broadly decline in the afternoon. Italy revealed some impressive industrial production data for July, but it wasn’t enough to enough to attract buyers. On a year-on-year basis, Italian industrial production rose by 4.4%, while traders were expecting a reading of 3.8%.
Commodities
Gold is fractionally higher today after it spent most of the day in the red. The risk-on attitude of traders has put pressure on the asset, and the slightly firmer US dollar over the past few days isn’t helping either.
Gold has had a great run since early July, and even though buying momentum is slipping, it is still in its upward trend. The jump in job openings and labour turnover summary (JOLTS) in July to 6.17 million, from 6.12 million in June, couldn’t keep the metal down – which tells us the market is still bullish in the face of stronger US jobs data.
Brent crude and WTIl are in positive territory after a report from OPEC showed that oil production from the members fell last month. The major oil producers clearly mean business now, as at the start of the summer we saw production actually rise from some members.
OPEC’s production freeze will last until the end of March 2018, and Saudi Arabia is floating the idea of extending the production cut until the end of June 2018.
Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.