Europe
European stocks were again dogged by weakness in emerging markets as Kazakhstan became the latest country to devalue its currency by allowing it to free float. There was added uncertainty surrounding the political future of Greece and the viability of its bailout after it was reported Prime Minister Tsipras may be about to call snap elections.
On the same day that Mr Tsipras secured his country’s first instalment of bailout funds from creditors, he is reportedly set to call for snap elections to take place in one month’s time. Polls suggest Tsipras is still the most popular politician amongst the electorate but he has lost the confidence of a significant number of members of his own ruling Syriza Party.
The German DAX extended losses to six-month lows and has now given up over 70% of its gains since the start of 2015.
UK retail sales grew less than expected in July but stripping out the effect of lower prices paid at the pump for cheaper gasoline, core retail sales rose by 0.4% in the month as expected.
Global economic worries have sent the commodity-sensitive FTSE 100 to its longest losing run since 2011 and sent it to a 7 month low and 10% below its peak in April. A bounce in metal prices spurred a similar move in the mining sector with gold-miners Randgold (LONDON:RRS) and Fresnillo (LONDON:FRES) leading the gains but two third of shares were lower amidst general bearish sentiment.
US
US stocks opened lower on Thursday and extended losses in early trading with the S&P 500 dropping over 1% to take it negative for 2015.
Only Johnson & Johnson (NYSE:JNJ) was higher on the Dow Jones Industrial Average with big tech stocks Apple (NASDAQ:AAPL), Cisco, Microsoft (NASDAQ:MSFT) and Intel (NASDAQ:INTC) seeing some of the biggest losses as investors retreated from growth sectors in a falling market.
FX
The US Dollar was mostly lower on Thursday as downside momentum continued from the more dovish than expected Federal Reserve minutes and underwhelming inflation data released on Wednesday.
In one of the biggest one-day moves you’re ever likely to see in FX markets, The Kazakhstani tenge fell over 25% after the country officially unpegged from the US dollar. Kazakhstan’s government and central bank decided to let the tenge free float in order to compete with the declining currencies of its two biggest trading partners; Russia and China.
The British pound was more or less flat versus the dollar but fell against the euro after July retail sales grew less than expected. GBP/USD is sitting just below 1.57, it’s price ceiling for the past 6 weeks.
The euro was the major beneficiary of the weaker dollar as EUR/USD surpassed 1.12 again to edge out a three week high.
Commodities
Heavily oversold commodities were boosted by a weaker dollar on Thursday despite ongoing concerns over China and other emerging markets’ economic health
Precious metals gold and silver have rebounded sharply in the past two days after having fallen at the start of the week. As stock markets continue to slide towards multi-month lows and emerging markets look increasingly unstable, gold and silver are getting renewed safe haven flows.
Brent / WTI crude oil spreads compressed on Thursday. Both markets look very weak but WTI saw some short-covering just shy of the psychologically significant $40 per barrel level.
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