- Lighter trade in Europe with US on holiday
- FTSE gives back half early gains
- Threat of more fines sends StanChart to six-year low
- Pound bounces back from nine-day losing streak
- Crude hit by rise in North Sea output
UK & Europe
Trading was a little lighter in European stocks on Monday with the US exchanges closed for Labour Day but positive German economic data and some semblance of stability in China allowed a modest rebound of Friday’s US jobs report-induced sell-off.
There wasn’t much in the way of a positive catalyst other than a rebound from Friday’s drop so equities gave back some initial gains. There’s this niggling sense that there could be another bout of volatility out of China just around the corner. With a US rate-rise possibly around the corner, it just creates a bit of anxiety in the market.
The German DAX and FTSE 100 were both up in the vicinity of 1% but gave back around half later in the day.
A new package of reform measures aimed at cutting debts helped make Glencore (LONDON:GLEN) a top riser on the FTSE. Though like the index some gains were given back as a 12% surge slipped back to under 7% late in the day. The measures including asset sales, a dividend cut and rights issues are all aimed at addressing the firm’s over-leveraged balance sheet that leaves it exposed during the current bear market for commodities.
Standard Chartered (LONDON:STAN) fell to the bottom of the FTSE on reports of new fines for the alleged breaking of sanctions in place for dealing with Iran. The involvement of a whistle-blower in the US Department of Justice’s investigation would suggest chance of the case being dropped look unlikely and StanChart itself has warned of “substantial monetary penalties”. It would be breaking a previous settlement so the DOJ will be looking to set an example.
A bounce in the price of copper on Monday improves the chance the metal has formed an interim base after hitting fresh six year lows two weeks ago. Copper’s recovery is helping FTSE-listed copper miner Antofagasta (LONDON:ANTO) to over 7% gains on Monday.
AB Foods (LONDON:ABF) was a top faller after a poorly-received half-year update. AB Foods continues to be a story of two businesses with diverging performance profiles; progress at Primark and falling profits in its sugar business.
US
US markets were closed for Labour Day
FX
Minimal economic data left the dollar mixed on Monday, gaining against the Swiss franc and Japanese yen but lower versus the British pound and Australian dollar.
The pound bounced back from its nine-day losing streak and four-month lows versus the dollar with no other catalyst except being hugely technically oversold. EUR/GBP slipped back to the 0.73 handle but remains within its 0.725-0.74 range.
Commodities
A three-year high in crude production in the North Sea and Nigeria coupled with the possibility of Iran sanctions being lifted as early as Q1 next year put pressure on oil prices. Iran has been gearing up production ready for export once sanctions are lifted, today announcing it is ready to export 200k barrel per day to Spain. North Sea and Nigeria production is set to expand to the largest in three years in October according to loading programs.
The safe-haven rally in gold that took it has high as $1,170 per oz looks distinctly under question. Gold hovered below the key $1200 per oz, failing to attract any safe-haven demand as stock markets trended generally higher. The idea that the Fed is looking to raise rates is still very much present and if equity markets stabilise above the August lows, there’s not much cause to hold onto gold.
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