European equity markets reversed from earlier strong gains and ended the day fairly flat as investors continued to remain cautious despite a positive reading of the US manufacturing PMI data. The DAX, IBEX and the London benchmark index edged slightly higher, while the CAC index finished slightly lower and the euro continued to remain under pressure against the US dollar after trading near 1-year low at 1.31.
We experienced a heavy sell-off in the oil market today as Brent front month futures plunged more than $2 to retest $101 per barrel, while the WTI front month contract retreated sharply below $94 per barrel.
In precious metals, gold also plunged more than 1.7% towards $1250 per ounce, while silver retested the $19.0 area.
On the macroeconomic front, the US economic data was fairly mixed. US Markit manufacturing PMI fell to 57.9 in August missing analysts’ expectations. The ISM manufacturing jumped to 59.0 in August compared to 57.1 in July, while construction spending rose strongly by 1.8% in July.
In addition, Eurozone’s producer prices fell by 0.1% in July, in line with expectations compared to a 0.1% rise in June. In the UK, Markit/CIPS construction PMI climbed strongly to 64.0 in August beating estimates of 61.5 after hitting its highest level since 2007.
Investors are likely to remain cautious in the next few trading sessions, awaiting the key release of the US non-farm payrolls data on Friday, which could provide an insight about the US employment conditions and sentiment. The USD index is currently holding around 83.0, adding further pressure to global equities and commodities.