Europe
UK shares have had another negative day after the volatility of yesterday with little in the way of significant drivers one way or the other. Concerns about a “Yes” vote, now all too real appear to be keeping investors cautious.
This caution is keeping the investors on the sidelines playing a watching brief as the politicians from both sides of the Scottish independence debate trade metaphorical blows on the merits or otherwise of being in or outside of the Union.
Markets will now be watching the rather frenzied cavalry charge of Messrs Miliband, Brown and Cameron, to see whether this new political onslaught will help to arrest the momentum of the “Yes” campaign, and breathe new life into the “No” campaign.
There is a concern though that it may be too little, too late, particularly since none of them seems particularly popular in Scotland.
On the downside we’ve seen oil and gas stocks come under pressure due to declining energy prices, with Brent Oil prices hitting a 14 month low yesterday. Royal Dutch Shell (LONDON:RDSa) shares have come under pressure as has BG Group (LONDON:BG).
Also falling Scottish & Southern Energy Plc (LONDON:SSE) has continued to fall in the wake of the Scottish vote uncertainty as fears it might lose its UK government funding for its renewable energy projects.
Some of the more heavily sold stocks yesterday appear to be recovering some of their equilibrium today with Lloyds Banking Group Plc (LONDON:LLOY) having a positive day, along with Royal Bank of Scotland Group PLC (LONDON:RBS) and Aberdeen Asset Management Plc (LONDON:ADN).
US
US markets have continued to look weak with little in the way of economic drivers one way or the other ahead of this week’s August retail sales data which is due on Friday.
Stocks in focus include Home Depot Inc (NYSE:HD) after the company confirmed it had been the target of a hack attack which compromised some customer data all the way back to April.
Apple Inc (NASDAQ:AAPL) shares will also be in the spotlight as markets get set for today’s media event where it is expected we will see the unveiling of a new iPhone 6, as well as updates on a number of other product updates. If there is any hint of disappointment at what Apple unveils today a sell-off in Apple shares could well trigger a broader sell-off in US markets which are looking increasingly fatigued at these high levels.
FX
The GBP/USD got a temporary lift today by comments from Bank of England governor Mark Carney that suggest interest rates could rise as early as the first quarter of next year. As you would expect these comments are likely to be predicated on a Scottish “No” vote, as it would be hard to imagine in what circumstances that the central bank might feel compelled to raise rates on the back of a “Yes” vote, and the ensuing volatility that would arise from that.
What was more notable was the Governor’s comments that a currency union was incompatible with sovereignty, reiterating his comments from earlier this year, and a subtle reminder to SNP leader Alex Salmond that for all his claims to the contrary, sharing a currency remains fraught with difficulties.
The US Dollar has continued to put the Yen under pressure hitting its highest levels in six years against the Japanese currency. The break of 105.60 which had acted as a strong barrier for most of this year gave way overnight and we could well see further gains towards 110.00 as the Bank of Japan looks at further easing measures.
The Australian dollar has continued its recent losses, making three month lows as iron ore prices continue to come under pressure, while weaker copper and gold prices haven’t helped either.
Commodities
Commodity prices have continued to come under pressure on concerns over weaker Chinese demand with iron ore prices hitting five year lows, dragging Copper prices lower in the process, which hit two month lows today.
Brent oil prices hit a 14 month low yesterday and have continued to remain under pressure as a stronger US dollar and a weak economic outlook weigh on demand.
Speculation about the timing of future Federal Reserve tightening measures and the fragile Ukraine ceasefire is keeping gold prices capped after the yellow metal hit three month lows yesterday.
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