Europe
With no US markets today there has been little in the way of positive catalysts to drive equity markets as investors digest a slew of disappointing economic announcements from China, Europe and the UK.
So far markets appear to be ignoring the latest negative headlines out of Ukraine and are instead choosing to focus on the unlikely prospect of further central bank action later this week.
This morning’s disappointing manufacturing PMI data from China, as well as Spain, France, Italy and Germany has once again shifted the focus on to the expectation of more monetary stimulus, with particular attention on this week’s European Central Bank rate meeting.
It appears that investors are holding onto the outside prospect that the ECB might announce further steps to help boost growth and demand later this week, and this appears to be outweighing any concerns about an escalation to events in Eastern Ukraine, and this appears to be limiting the downside for now.
The biggest movers today have been ITV (LONDON:ITV) , which is higher on reports that the company could well be an acquisition target for Virgin Media owner Liberty Global (NASDAQ:LBTYA). Also higher is BAE Systems (LONDON:BAES) after being upgraded by Bank of America Merrill Lynch to “buy”, on the basis that rising geopolitical concerns will increase the prospect of increased arms sales, and in turn the company’s profit outlook.
On the downside UK food retailers Morrisons (LONDON:MRW) and Tesco (LONDON:TSCO) are both lower, with concerns rising that Morrisons may have to cut its dividend while new Tesco boss Dave Lewis has had to digest the news that one of its largest shareholders cut two thirds of its stake.
FX
The Euro has continued its recent slide posting a one year low against the US dollar as disappointing economic data feeds the expectation of more stimulus from the ECB in the coming months.
The Pound has shrugged off the worst manufacturing PMI number since July 2013 to remain fairly well supported above $1.6600, though the number was still better than its peers in Europe which also slid back sharply.
The US Dollar Index has continued its advance hitting its highest levels for over a year, ahead of this week’s latest jobs data. General consensus would appear to be that this week’s economic data from the US is likely to further reinforce the narrative of a stronger US dollar in the coming months.
Commodities
Crude Oil prices have slipped back today weighed down by today’s disappointing economic data from China and Europe, while expectations of higher production levels are helping keep a lid on prices.
Copper prices got clobbered after this morning’s disappointing Chinese manufacturing PMI data for August with the HSBC measure coming in at a three month low.
Palladium prices have continued their push higher, hitting thirteen year highs as rising tensions in Ukraine, fuel expectations of further sanctions against Russia, which is world’s largest producer of the precious metal.
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