MKS PAMP Group - Europe/US Market Update

Ranges: Europe/US Markets

MACRO: 

- US stock markets lost ground on Wednesday ahead of the upcoming NFP report due Friday 
- The DJIA lost 0.29%, the S&P 500 dropped 0.24%, and the NASDAQ gave up 0.19% 
- Energy stocks were hit hardest (-1.4%) following a -3% slump in crude prices (US inventories higher, USD also higher) 
- Materials (-0.9%) were the other major loser, whilst utilities (+0.3%) led the gainers 
- Markets look to be treading water ahead of the US non-farm payroll release on Friday (expecting ~180k), with a slight bias to the downside 
- In US economic data, ADP private payrolls for August rose 177k (mkt est 175k) 
- The National Association of Realtors' pending home sales index rose in July by a seasonally adjusted +1.3% (mkt est +0.7%) 
- The August Chicago PMI fell to 51.5 (mkt est 54.0), the weakest performance in 3 months 
- European equities fell across the board, led by commodity related stocks 
- The DAX lost 0.61%, the CAC 40 gave up 0.43%, and in the UK the FTSE 100 fell 0.58% 
- There was talk in the banking sector of a possible merger between Deutsche Bank and Commerzbank 
- The banking index rose 1.7% on the news 
- The preliminary eurozone inflation figure for August printed at +0.2% (mkt est +0.3%), still well below the ECB's 2% target 
- Commodities were mostly lower: iron ore -0.6%, aluminium -1%, nickel back -0.7%, however copper inched up +0.2% 
- Commodity related equity fell sharply: Rio Tinto -2.1%, BHP Billiton -4.9%, Anglo American -4.6% and Glencore -1.7% 
- The VIX complacency gauge is up 2.3% to 13.42 
- The dollar index is down 0.021 to 96.033 
- US Treasuries: The benchmark 10-year bond yield is up 0.9bps to 1.575% 
  
PRECIOUS: 

- The precious complex continues to edge lower 
- Gold started the European session around 1314 after a quiet Asian trading day (SGE premium ~$4) 
- A short rally up to the session high of 1315.25 occurred around 9.30am in London, however it was mostly down hill from there 
- New York participants were quickly on the offer and pushed metal sharply lower to an absolute low of 1304.85 
- The ADP employment data release was the catalyst for the sell-off but buyers were quick to buy back the metal below 1310 
- The metal closed around 1309, whilst for the day, silver lost around -0.7%, platinum -0.9% and palladium -2% 
- The Philadelphia gold & silver index lost 1.82% and the NYSE Arca gold bugs fell 2.16% 

PRE-ASIA COMMENTS: 

- Gold is trading just above 1310 in early Asian trading 
- All eyes will be on Friday's NFP release; expect most participants to stay on the sidelines 
- Regional equities are reasonably muted so far (Nikkei +0.04%, All Ords -0.24%) 
- Data today: 
China NBS manufacturing PMI 
Australia retail sales 
China Caixin manufacturing PMI 
India manufacturing PMI 
Russia manufacturing PMI 
Swiss retail sales 
Euro area manufacturing PMI 
UK Markit/CIPS manufacturing PMI 
US initial jobless claims 
US ISM manufacturing PMI 
US total vehicle sales