Europe
Stock markets in Europe are experiencing low volatility as the rally that we saw at the start of the week has lost momentum. The bullish sentiment on the back of Hurricane Irma not being as severe as predicted, and no new tensions in relation to North Korea, has been replaced with a lacklustre attitude. You could say traders are pausing for breath, after the positive run.
The FTSE 100 has fallen behind the indices of the eurozone on account of the relatively strong pound. The DAX and the CAC 40 have been swinging between positive negative and territory throughout the session. The common theme among all European equity markets is a small range for the day.
In London, miners like Rio Tinto (LON:RIO), BHP Billiton (LON:BLT), Anglo American (LON:AAL), and Glencore (LON:GLEN) are offside due to the large drop in the price of copper. The red metal is under pressure today as there are reports of heavy selling from commodity funds.
US
The Dow Jones, S&P 500 and Nasdaq 100 are fractionally lower as buying momentum has melted away. Overall, US markets are in good shape as the major indices as within sight of record highs. Today’s moves is nothing to get alarmed about, there hasn’t been any macroeconomic news that has soured sentiment, I would just say that investors has momentarily lost their appetite for the time being.
It is important not to underestimate how attractive record highs are to investors, and while they are extremely close, we could see them acting as magnets. The feel good factors that comes with breaking an all-time high often unlocks another round of buying momentum, but they just need to be broken in the first place.
FX
The GBP/USD traded at a one-year high this morning but a broad positive move in the US dollar took the pound lower. Unemployment in the UK dropped to 4.3%, while economists were expecting it to remain at 4.4%. On a month-on-month basis, UK average earnings excluding-bonuses rose by 2.1%, but traders were anticipating an increase of 2.2%.
The EUR/USD drifted lower as the greenback attracted a wave of buying. German and Spanish inflation came in at 1.8% and 1.6% respectively, both meeting estimates from economists. The CPI levels of both counties were respectable, and they are heading in the right direction, but the region as a whole is still finding it difficult to ramp up the cost of living.
Commodities
Gold is softer today again as the push higher in the US dollar is weighing on the price. The metal has seen a reversal of fortune since Friday – when it posted a 13-month high. This week, we have seen dealers move their money into riskier assets like shares, and in turn we have seen funds flow out of gold.
Brent Crude oil and WTI are higher on the day as traders are mindful that Saudi Arabia are talking about extending the production freeze until the end of June 2018. Also, production from OPEC members dropped last month, and this is further evidence that the group are serious about curtailing output.
The Energy Information Agency (EIA) figures showed that US oil stockpiles were 5.88 million barrels, while the markets was expecting stockpiles to be 3.5 million. The American Petroleum Institute figures yesterday also showed a jump in inventories, so today’s numbers were not a shock.
The EIA report also showed that gasoline inventories fell by 8.42 million barrels.
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