MKS PAMP Group - Europe/US Market Update

Ranges: Europe/US Markets

MACRO:

- US equities pushed higher late in the session, boosted by the slumping
greenback, surging oil price and FOMC voter Dudley stating that "financial
conditions are considerably tighter than they were at the time of the
December meeting."
- The Dow Jones surged 183.12 points, the S&P500 jumped 9.5 points whilst
the tech heavy Nasdaq lost 12.71 points.
- There were gains for energy (+4%), materials (+3.3%), telecoms (+1.7%)
and industrials (+1.5%) whilst tech (-0.4%) and discretionary (-0.3%) were
lower on the day.
- European shares were lower again, dragged down by the banking sector. The
STOXX Banking sector lost 3.4%. The FTSEurofirst 300 index fell 1.5%, the
German Dax also lost 1.5% whilst the UK FTSE was 1.4% lower.
- The VIX gauge slipped 1.2% to 21.71.
- The dollar index tanked 1.672 to 97.2 (the largest one day fall in 7
years!). The AUD surged nearing 200 pips to a high of 0.7190, whilst the
EUR rallied up to 1.1128 (after trading towards 1.0900 earlier in the
session).
- US treasuries were mixed. 2 year yields were flat at 0.73% whilst 10 year
yields were up by 3 points to 1.1877%.
- Oil prices surged overnight. Brent rallied 7.1% to $35.04 whilst Nymex
jumped an eye watering 8.0% to $32.25.
- Base metal prices were generally higher, with lead leading the way, up
2.2%.
- The US ISM services index eased from 55.8 to 53.5 in January.
- The Markit services index dropped from 53.7 to 53.2.
- The ADP employment index showed that private payrolls rose by 205,000 in
January (exp 195,000).
- The mortgage market index fell by 2.6%, with purchases down 7% and
refinancing up 0.3%.


PRECIOUS:

- Precious metals ripped higher overnight in the wake of the USD
capitulating. Gold traded to its highest level since November last year.
- Gold jumped close to $20, breaching its 200dma on its way up to a high of
1144.20.
- Huge volume exchanged hands following the ISM release, with specs on the
bid squeezing the yellow metal up through a number of key technical levels.
- Asia was subdued once again tracking sideways between 1126-1129.
- London was also quiet, but the fireworks began in NY, with the USD under
heavy pressure, propelling gold up through 1140.
- Silver also traded with a solid bid, jumping to a high of 14.78
- China continues to show little interest at current levels prior to their
New Year holiday period.
- A report on Bloomberg showed that China's gold mining output failed to
rise for the first time in 16 years.
- All eyes on NFP's tomorrow
- Gold ETF's continue to accumulate the metal, up another 125,629 ozs.
Total holdings 49,287,209 ozs.
- The Philadelphia Gold and Silver Index up 8.16% whilst the NYSE Gold BUGS
Index was up 8.55%.


PRE-ASIA COMMENTS:

- Asian equities open higher following Wall Street's firm session.
- The USD remains on the back foot after the worst session for the
greenback in 7 years !
- Ahead today:
New Zealand RBNZ McDermott Speech
Australia NAB Business Confidence
New Zealand RBNZ Fiennes Speech
US Federal Reserve Rosengren Speech
Eurozone ECB Draghi Speech
UK Halifax House Prices
Eurozone ECB Publishes Economic Bulletin
Eurozone ECB Knot Speech
Eurozone EU Commission Publishes Economic Forecasts
Eurozone ECB Mersch Speech
UK BoE Bank Rate
UK BoE Inflation Report
UK BoE Inflation Report Press Conference
US Federal Reserve Kaplan Speech
US Initial Jobless Claims
US Factory Orders
US Durable Goods Orders