🤯 Have you seen our AI stock pickers’ 2024 results? 84.62%! Grab November’s list now.Pick Stocks with AI

Yields And Gold Jump As Central Banks Run On Empty

Published 03/08/2016, 06:21
Updated 03/08/2021, 16:15
GBP/USD
-
USD/JPY
-
AUD/USD
-
UK100
-
XAU/USD
-
XAG/USD
-
STOXX50
-
GM
-
F
-
BP
-
SHEL
-
CSGN
-
DBKGn
-
CBKG
-
TPK
-
TW
-
PFE
-
AET
-
GC
-
LCO
-
SI
-
CL
-
PG
-
FRES
-
CVSG
-
DLGD
-
DXY
-
FCAM
-

UK and Europe

European shares were lower on Tuesday, with banks leading the decliners for a second day over rising scepticism of the weekend’s stress test results.

A heavily signposted fiscal stimulus package announced in Japan underwhelmed investors who until recently thought the country may introduce so-called “helicopter money”. The disappointment was on display through to a stronger Japanese yen, with USD/JPY slumping to 101 and higher JGB yields. The reduced scope for monetary stimulus from the BOJ fed through to other areas of the bond market, with yields on gilts, treasuries and bunds all substantially higher.

The pickup in oil prices and a jump in sterling helped the FTSE 100 recover some of its losses in the afternoon, though banks remained the biggest drag.

Oil prices rebounded from bear market territory, with WTI crude recovering the $40 per barrel mark. This softened the blow on the energy sector, though oil majors BP (LON:BP) and Royal Dutch Shell (LON:RDSa) were still down on the day.

Data showing construction output fell at its fastest pace since June 2009 and a Brexit warning from building supplier Travis Perkins (LON:TPK) had sent homebuilders lower, but by afternoon shares of Taylor Wimpey (LON:TW) were amongst the top performers.

Direct Line Insurance (LON:DLGD) shares rose over 11% after the firm reported a smaller-than-expected fall in first-half earnings and announced a special dividend of 10p per share.

Germany’s Commerzbank (DE:CBKG) was amongst the worst performing banks after it replaced its annual profit target by forecasting a loss. The share price decline this year in Deutsche Bank (DE:DBKGn) and Credit Suisse (SIX:CSGN) has been so severe that both banks have been demoted from the Euro Stoxx 50 index.

US

US stocks opened lower amid a slide in European and Asian markets, though a rebound in oil prices limited the damage.

Health care and auto shares were in focus amid vehicle sales data and corporate earnings. Shares of Procter & Gamble (NYSE:PG), Pfizer (NYSE:PFE), CVS (LON:CVSG) and Aetna (NYSE:AET) rose after beating earnings estimates for the second quarter. Shares of Ford (NYSE:F), General Motors (NYSE:GM) and Fiat Chrysler (NYSE:FCAM) all dropped sharply after reporting disappointing sales volumes.

FX

The US dollar was lower across the board on Tuesday as expectations of a September rate hike continue to fade following last week’s poor GDP data. US data released on Tuesday was mixed, with core PCE inflation stuck at 1.6% y/y whilst spending rose more than expected but personal income missed expectations.

The Australian dollar rose as traders forecast the Reserve Bank of Australia would stay on hold after cutting rates to a record low of 1.5%. The Australian dollar erased early losses in response to the rate cut in another sign of investors questioning the efficacy of central bank stimulus.

The Japanese yen was higher following investor dissatisfaction at a Japanese fiscal stimulus package worth $274bn. The government’s emphasis on fiscal stimulus dampens the chance of further easing from the Bank of Japan following an underwhelming decision to buy more ETFs at its meeting last week.

Commodities

A drop in the dollar and optimistic guidance from gold-miner Fresnillo (LON:FRES) helped precious metal prices rise back to within spitting distance of yearly peaks. Gold topped $1360 per oz and silver was on course for its highest close this year as the dollar index fell to a five-week low.

Oil prices rebounded from bear market territory with WTI crude recovering the $40 per barrel mark. Traders are awaiting the latest US inventory data to justify a move below $40 on WTI. WTI at $38 and Brent at $40 would mark a 50% retracement of the gains from the low this year and could be a target for short-sellers.

Disclaimer: CMC Markets is an execution only 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.

Original post

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.