Europe
European equity markets had an uneventful morning but the sell-off in the pound and the euro prompted some buying in the afternoon. The jump higher in the US dollar, on the back of strong job opening figures gave a reason for dealers to go long the greenback, and in turn, sell sterling and the single currency.
Mining companies lost ground today after China revealed import and export data that came in under market expectations. The second-largest economy in the world saw exports rise by 7.2%, while economists were expecting an increase of 11%, and imports were 11% higher, while the consensus was for an 18% jump, and the June figure was 17.2%. China has been a major buyer of minerals in recent years and today’s numbers show a slight softening for demand. Investors sold basic resource stocks like Anglo American (LON:AAL), Rio Tinto (LON:RIO), BHP Billiton (LON:BLT), and Glencore (LON:GLEN).
Shares in Standard Life (LON:SL) lost ground in early trading but managed to claw back most of the losses. The asset manager stated that inflows fell and outflows increased, but revenues and earnings before tax rose in the first-half. It is a good start to the year, and since the share price hit a 23 month high on Friday, momentum is with the bulls.
Paddy Power Betfair released its first-half figures in full today, as some of the details were announced yesterday. Revenues and earnings were higher on the year, but the growth rate was slower and this worried investors. The Euro 2016 football tournament meant that last year’s numbers were going to be difficult to live up to. The bookmaker cut odds and ramped up spending on promotions in order to draw in new business, and this added to the bearish sentiment. On the bright side, the integration between the businesses is going well and the interim dividend was increased by 25%. The share price is down 3.5%.
US
It’s the same old story in the US where he Dow Jones hit another record high. The S&P 500 is eyeing the all-time high also, as the job openings and labour turnover summary (JOLTS) jumped to 6.16 million in June – a record high.
Economists were expecting 5.74 million, and the May report was 5.66 million. The JOLTS report is further evidence the US labour jobs market is improving. On Friday, we saw the non-farm payroll figure exceed estimates, an upward revision to the June number, and unemployment ticked lower.
FX
GBP/USD dropped to a level not seen for over two weeks on the back of the strong JOLTS report. There was no major economic updates from the UK today, but volatility picked up after the US released the JOLTS update. Sterling has been sliding since Thursday when the Bank of England delivered a dovish statement.
The EUR/USD also pushed lower as traders bought into the greenback after the job opening numbers from the US were well received. This is more of a US dollar positive story rather than a euro negative story since traders were not put off by the disappointing German import and export figures this morning. The largest economy in the eurozone saw imports drop by 4.5% and exports fell by 2.8% in June.
Commodities
Gold started off on a positive note, but turned negative after the JOLTS figure was revealed. It was a double whammy for gold since it is priced in US dollar, and the jolt higher in the greenback thanks to the JOLTS report put extra pressure on the metal. Traders are still divided over whether the Federal Reserve will raise interest rates in December or not, but at the moment gold is feeling the pinch.
WTI and Brent Crude traded higher in the early part of the day, but have since turned lower. It the second, and last day of the OPEC meeting in Abu Dhabi, and the big new out so far is that Saudi Arabia plans to cuts oil exports to Asia by 10% in September. The meeting came about as a way to get members to properly comply with the production freeze. The major oil producers want to push up the price of oil since the announcement of the extension to the production cut back in May, had the opposite effect.
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