Europe
Stocks in Europe were mostly on the back foot today despite a new poll indicating a majority of “No” voters for independence in Scotland after weak price inflation in China and Europe, war rhetoric from US President Obama and new sanctions from the west on Russia .
Royal Bank of Scotland Group PLC (LONDON:RBS), Lloyds Banking Group Plc (LONDON:LLOY), Standard Life Plc (LONDON:SL) and other firms’ exposed to Scotland bounced back after yesterday’s poll sponsored by the Daily Record showed a majority of Scottish voters want to stay in the United Kingdom.
Some large multinationals are upping the anti-separation rhetoric by outlining contingency plans for a headquarters move should the “Yes” camp win. Should the vote be evenly split there is speculation that some companies may move to England or Wales anyway to avoid risk from any future revote.
The FTSE 100 wasn’t able to capitalise on the new Scottish vote after CPI data in China dropped below expectations to 2.0% year-over-year which weighed on mining stocks.
The new sanctions on Russia are set to enter force tomorrow and Russia is already responding with reports from Poland that natural gas deliveries are down a staggering 45% leading into the cold winter season.
Morrison (LONDON:MRW)'s half-year results showed some small signs of a turnaround following price discounting to compete with Aldi and Lidl. Tesco (LONDON:TSCO) was lower after having not discounted as heavily as Morrison’s.
Next (LONDON:NXT) shares dropped after the retailer failed to lift its full-year guidance despite reporting a 19% rise in first-half profit.
US
US stocks and commodities were falling in sync today as geopolitical tensions rise following a speech by President Obama to increase action against IS terrorists and the ongoing sanctions war with Russia.
Shares in the US were already in trouble following disappointing Chinese inflation data and were hit again when weekly jobless claims increased by 11k in the week, the highest since June 28. The weekly data had additional significance following the disappointing NFP print last week of 142k jobs created in August. One data point doesn't make a trend so the test will be whether claims bounce back on the next release towards the 300k mark.
The Dow 30 and and S&P 500 did pull off their lows as consideration was given to the fact that the week included the Labour Day holiday weekend when adjustments to jobless data can be difficult and may have skewed the figure.
Shares in Twitter Inc (NYSE:TWTR) were flat in response to the announcement of $1.3bn bond issuance to potentially fund future acquisitions as the company seeks to keep pace with Facebook Inc (NASDAQ:FB) and Chinese rival Weibo Corp (NASDAQ:WB).
FX
The US Dollar was mixed after weak data from China to Europe and the US.
AUD/USD made good gains after a strong employment report but all the gains were undone and then some after China's disappointing inflation data pointed to weak demand for Australia's minerals/metals. The reversal took place around 9205, the lows from April and May 2014 and points to possibly more declines towards 0.9080 the big round number 0.90.
The Russian ruble made new lows against the USD.
Commodities
Copper prices plummeted after Chinese consumer price inflation dropped. The slowing inflation, like in Europe can partially be explained by energy prices but also clearly reflects slowing demand and a property market slowdown.
Gold and silver were seeing continuing declines on recent US dollar strength, whether good can pull back above $1,240 per oz could largely depend on the FOMC meeting next week and possibility of a changed language to indicate an earlier rate hike.
Oil prices were lower again on ample supply and soft global demand. Saudi Arabia has slashed production to defend the $100 per barrel level in crude although OPEC have said there is no need for an emergency meeting over falling prices.
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