Rumoured state intervention in the Chinese stock market prevented another deep sell-off and allowed developed markets the chance to rebound from weekly losses. US stocks opened higher bolstered by weak economic data that furthered the case for no rate-hike at the September Fed meeting.
- · Ashtead leads FTSE 100 recovery
- · Europe rebounds ahead of ECB meeting
- · Dow Jones bounces triple digits after sell-off
- · Unexpectedly large build in oil inventories
UK & Europe
Ashtead Group (LONDON:AHT) led the benchmark FTSE 100 stock index higher after increased tool hire in the US helped it to strong quarterly results. Pharmaceutical were in demand with Hikma and GlaxoSmithKline top risers following broker upgrades. The 8% plunge in oil prices yesterday capped gains on the FTSE 100 with heavily weighted BP (LONDON:BP) and Shell (LONDON:RDSa) shares seeing losses.
The announced departure of founder and CEO Nick Robertson sent ASOS (LONDON:ASOS) shares sharply lower.
The German DAX and French CAC swung between small gains and losses before sentiment was lifted and share prices rose after a strong open to US markets.
US
US stocks opened higher open on Wednesday in a relief rally after sharp declines on Tuesday as private payrolls and durable goods data for August missed expectations.
Even a 100 point rise in the Dow Jones only scratches at the surface of the 400-plus point drop yesterday and is more likely a sign of uncertainty and fear rather than confidence in higher prices.
FX
Weak ADP private payrolls and durable goods data had limited effect on the US dollar which gained ground against most of the G10 on Wednesday.
The British pound gained ground against the euro but was a flat against the dollar after another monthly rise in the construction PMI, albeit less than expected. GBP/USD is hovering around three month lows at 1.53
The euro dropped ahead of what is expected to be a dovish ECB meeting on Thursday with EUR/USD falling back away from 1.13.
Higher equities meant the Japanese yen lost some ground as a safe-haven with USD/JPY getting back above 120.
Commodities
Oil prices got a lift alongside global risk sentiment on Wednesday following Tuesday’s nail-biting 8% plummet but lost strength after a surprisingly large build in US inventories.
The strong huge 10% daily gain at the tail end of last week suggests the market was overly short and still has room to recover further. Until it gets officially denied, the possibility of an emergency OPEC meeting could keep a floor under the price of oil.
Gold has been serving its more traditional safe-haven role lately. A rebound in equities left gold prices lower although the weak US economic data reduces the chance of the Fed raising rates and limited gold’s decline.
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