Market Brief: EU stocks recover after weaker open

A summary of news and snapshot of moves ahead of the US session.

  • At mid-morning London, CHF, JPY and GBP were among the strongest while the AUD was the weakest in major currencies. Despite the “risk-off” tone from the FX markets, stocks turned positive after a weaker open. Crude oil prices were a touch firmer. Gold, silver and copper all eased back. Bond yields remained soft. It has been a quiet-ish day with Australia and China out, and with only a couple of noteworthy data releases on the economic calendar.
  • Among today’s data highlights, German factory orders fell 0.6% month-over-month in August versus a drop of 0.4% expected, while investors in the Eurozone turned more pessimistic as the Sentix Investor Confidence index deteriorated to -16.8 from -11.1 previously. Despite this, the EUR/USD was flat, clinging onto the key 1.0960 short-term support. US Federal Reserve Chair Jay Powell is speaking at 18:00 BST.
  • Stocks: index futures gapped lower at the open overnight before staging a small recovery. Bloomberg reported that Chinese officials on recent visits to the US have indicated the range of topics they’re willing to discuss as part of a potential trade deal has “narrowed considerably.”
  • The markets had ended higher in the last two days of the previous week after suffering big losses earlier amid concerns over company earnings growth following the release of disappointing macro data, which pointed to a slowdown in economic activity, most notably in US manufacturing. But an unexpected drop in US unemployment rate on Friday eased concerns over a potential recession, allowing the markets to breathe a sigh of relief.
  • With macro concerns back to the forefront of investors’ minds, there will be plenty of economic data to drive sentiment this week, particularly from Europe. In addition, we will have US inflation figures and Canadian employment data to look forward, as well as minutes from both the ECB and FOMC’s last policy meetings. The US-China high level trade talks are also expected to start this week, too.


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