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European equities are set to edge lower on the open. Despite a positive finish yesterday and a surprisingly strong HSBC PMI out of China overnight, sentiment still remains cautious. Markets have been buoyed by Europe’s lack of cohesive action over Russia, but today see’s the European Commission debate the tougher economic sanctions that were mentioned at Tuesdays Foreign Ministers meeting. Expectations are that they will stay true to form and do nothing; but there is always the possibility that international pressure may spur some surprise action with some teeth so traders remain cautious.
The Dow Jones ended slightly down at 17,088 yesterday following a sharp fall for Boeing, one of the top constituents. It was a surprise as the general tone of corporate earnings has been positive amid signs that inflation has also been kept on a short leash. However, in overnight trading investors discarded the better than expected results for Chinese manufacturing pushing the Dow further down. Consumer confidence in the euro zone unexpectedly dropped in July to minus 8.4 from minus 7.5 in June amid signs the ECB has plenty of work to do to spur economic growth. Despite the fall of just 2 pips for the shared currency against the greenback to 1.3463, its outlook remains under pressure since investors seem to favour the US dollar and not only for safety reasons.
The weekly crude stockpiles as shown by the US Department of Energy plunged almost double the estimates, sparking another rally in oil prices. Gasoline inventories also slumped to the lowest level in nearly five months further accentuating the selloff. So, it was almost a no brainer to see the WTI crude prices rising $1.28 to $103.26.
With a new all time record for the S&P 500, demand for precious metal as alternative assets was hit amid easing concerns in Ukraine. Gold prices lost $3.2 to $1304.2 and this early morning has already crossed below the $1300.00 mark.
Marius is a Dealer at Capital Spreads. His involvement with CFDs and spread betting started in 2008 after graduating from London Metropolitan University with a MSc in Finance. He contributes to the Daily Comment by providing a snapshot of the FX, indices and commodity markets (oil and gold).
Jonathan is a dealer at Capital Spreads. Having started his career in the city trading interest rate and bond derivatives in 2005, he then entered the spread betting and CFD industry in 2007 by joining the dealing desk at City Credit Capital. After successfully managing multiple asset risk books across the European, US and Asian time zones throughout the height of the financial crisis, he then took that experience to Capital Spreads in 2010.
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