MKS PAMP Group - Europe/US Market Update

Ranges: Europe/US Markets

MACRO:

- US equities closed broadly higher despite moderate economic data and several negative headlines
- The DJIA added 0.66%, the S&P 500 put on 0.78% and the NASDAQ gained 0.88%
- The ISM index of US manufacturing activity dropped to 50.8 in April (mkt est 51.4)
- The March Markit manufacturing PMI held at 50.8 (mkt est 50.8)
- US construction spending in March increased +0.3% MoM (mkt est +0.5%)
- Oil industry heavyweights Halliburton and Baker Hughes have walked away from their planned US$35bln merger primarily due to regulatory opposition
- Debt ridden Puerto Rico has defaulted on US$422m in debt
- Crude oil is declining 2.2% with June WTI trading at US$44.91 a barrel
- In Europe, the FTSEurofirst 300 index inched down 0.03% to 1342.21
- The main markets fared well for the session: DAX +0.84%, CAC 40 +0.31%
- London was closed for the May Day holiday
- Markit's manufacturing PMI for Germany in April rose to a 3-month high (51.8 v's 50.7 in March)
- Speaking at the annual meeting of the Asian Development Bank in Frankfurt, ECB President Mario Draghi has defended the bank's low interest rate policy
- Draghi thwarted German critics and reiterated that low interest rates are crucial to spur investment and consumption in the current economic environment
- The VIX complacency gauge fell 6.5% to 14.68
- The dollar index is down 0.5% to 92.607
- US Treasuries: The benchmark 10-year bond yield is up 3.2bps to 1.865%
 
PRECIOUS:

- The precious complex traded to new 2016 highs but failed to hold on to the majority of the gains
- Gold traded above the 1300 handle and touched a high of 1303.95 around 1pm in London before falling back to the low 90's by the US open
- US participants held the metal within a reasonably tight $8 range but failed to get it back above 1300
- Silver also pushed just above the important $18 level but was sold sharply thereafter down to 17.545 by the Globex close
- Platinum mimicked gold whilst palladium had a volatile session trading within a 2% range
- It was a holiday in London therefore there were no LBMA Auctions
- China and Japan were also on holiday for the day
- Support for gold lies at the overnight low around 1288 with resistance just above 1300
- The Philadelphia gold & silver index lost 2.28% and the NYSE Arca gold bugs index dropped 2.08%

PRE-ASIA COMMENTS:

- Gold is edging slightly higher in early Asian trading (last 1295.00/50)
- Regional equities are tracking higher so far (All Ords +0.73%)
- Data today:
RBA interest rate decision
Swiss consumer confidence
Spain consumer confidence
UK Markit/CIP manufacturing PMI
Brazil industrial production
US total vehicle sales

Good luck