A sharp sell-off in European equities

Thursday, March 26, 2015

Renewed conflict in Middle East dominated the markets today and weighed heavily on market sentiment, prompting a sell-off in global equity markets. The CAC, DAX, IBEX and the Italian and London equity benchmark indices retreated between 0.5% and 1.2%, at the time of writing.

On the macroeconomic front, Kansas City Fed manufacturing activity dropped to -4 in March compared to 1.0 in February, missing analysts’ expectations. However, we received fairly solid US employment data as weekly jobless claims dropped by 9,000 to reach 282,000 in the previous week. The US dollar index rebounded and climbed above 97.0 against a basket of currencies.

Crude oil prices extended gains and continued their strong upside momentum, supported by news overnight that Saudi Arabia pledged 100 planes and 150,000 soldiers in an operation against Shiite rebels in Yemen. Yemen is considered to be a key geopolitical location which is ideal for international shipping. Brent front month futures hit a high at $59.78 this morning but gave back part of earlier strong gains to hover around $58 per barrel. WTI front month futures also spiked above $52 per barrel this morning but centred around $50 per barrel in the afternoon’s session.

WTI front month futures

CL1 Comdty (Generic 1st 'CL' Fut 2015-03-26 16-25-20

Base metal prices tracked the uptrend with copper surging above $6,170 and aluminium gaining towards $1,800. Precious metals were all higher today and gold breached above the key level of $1,200/ounce. Silver held above $17 and platinum and palladium extended strong gains over 0.7%. 

Copper rebounded towards $6,200

LMCADS03 Comdty (LME COPPER    3 2015-03-26 16-23-56

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