MKS PAMP Group - Europe/US Market Update

Ranges: Europe/US Markets

MACRO: 

- US equities edged lower on Thursday ahead of Fed Chair Yellen's eagerly awaited Jackson Hole speech 
- The DJIA lost 0.18%, the S&P 500 dropped 0.14%, and the NASDAQ gave up 0.11% 
- Healthcare (-0.8%) was the key mover to the downside, whilst materials (+0.5%) led the gainers 
- Yellen is expected to provide the market with further guidance on the state of the economy and the latest projection of future interest rate rises 
- She is scheduled to speak at 10am US Eastern Time (Friday) 
- Dallas Fed Reserve President Kaplan commented to CNBC that "the case is strengthening" for a rate hike 
- Kansas City Fed Reserve President George also commented that it is time for a gradual move to increase rates 
- In US economic data, durable goods orders jumped a seasonally adjusted +4.4% MoM in July (mkt est +3.4%) 
- US initial jobless claims for last week lost 1k to a seasonally adjusted 261k (mkt est 265k) 
- The Markit flash US services PMI business activity index fell to 50.9 in August (mkt est 51.8), the lowest level since Feb 
- In Europe, stock markets fell for the first time this week (STOXX 600 down 0.8% to 342.02) 
- The DAX lost 0.88%, the CAC 40 gave up 0.65%, and in the UK the FTSE 100 fell 0.28% 
- German business sentiment fell in August at the sharpest rate since the euro zone debt crisis in 2012 (103.2 v's 108.5 mks est) 
- In commodities, oil seems to have found a base for the moment with WTI around $47 and Brent around $49 a barrel 
- Nickel lost 1.5%, copper fell 0.1%, iron ore down 0.4% and zinc gained 1.0% 
- The VIX complacency gauge is up 1.3% to 13.63 
- The dollar index is down 0.026 to 94.76 
- US Treasuries: The benchmark 10-year bond yield is up 1.4bps to 1.575% 
  
PRECIOUS: 

- The precious complex continues to be under short term pressure 
- Gold started the European session around 1327 before quickly falling through 1325 around 10.30am in London 
- US participants pushed the metal further south to a low of 1318.55 before bargain hunters bid the metal back above 1320 leading into the close 
- The relatively strong US durable goods release added downward pressure to the metal at the US open, albeit short lived 
- Traders were mostly happy to stick to the sidelines ahead of Yellen's 'price influencing' Jackson Hole speech 
- The downward trend line from the post-Brexit high in early July continues to dictate the upper boundary for gold 
- The metal has failed several times to move through this trend and could fall under further pressure should Yellen's speech turn materially hawkish 
- Silver chased gold and lost around $0.10 for the session whilst platinum fell by a similar percentage but palladium bucked the trend and gained ground 
- The Philadelphia gold & silver index gained 1.23% and the NYSE Arca gold bugs added 1.02%, primarily due to overselling during the previous session 

PRE-ASIA COMMENTS: 

- Gold is unchanged (last 1321.50/00) 
- Japan inflation for July printed this morning at -0.4% YoY (mkt est -0.5%) 
- Regional equity markets look set for a slightly negative session following the lead from Wall Street 
- Data today: 
German GfK consumer confidence 
France consumer confidence 
France GDP 
UK business investment 
UK GDP 
US GDP 
US PCE prices 
US Michigan consumer sentiment 
US Fed Yellen Speech