Global equities edge higher but precious metals reverse lower

Wednesday, October 22, 2014

European equity markets extended gains in today’s session, tracking the general upside momentum across the US and Asian equity markets. The DAX, CAC, IBEX and London equity benchmark edged higher and gained between 0.35% and 0.8%.

According to fresh rumours in the market, the European Central Bank is said to have bought Spanish covered bonds in its third day of asset purchases following the French and Portuguese securities it bought earlier this week. The ECB plans to reveal the amount of debt purchased on Monday 27th October 2014, verifying ECB President Mario Draghi’s plan.

On the macroeconomic front, the US CPI increase 0.1% m/m in September, compared to a decline of -0.2% in August, while the y/y figure remained unchanged at 1.7%. There was an absence of other major macroeconomic data from the US and Eurozone, so the main focus turned to currency movements as investors were looking for direction. The US dollar continued its strong rally as the USD index surged towards 85.8 against a basket of currencies, supported by the solid US inflation figure.

USD Index 

DXY Curncy (DOLLAR INDEX SPOT)  2014-10-22 16-09-18

However, the recent euro weakness continues to dominate the markets as the euro slid lower today to retest 1.265 against the US dollar. 

EURUSD Spot

EUR Curncy (Euro Spot )  Daily 22 2014-10-22 16-02-48

Crude oil prices reversed and gave back earlier gains following a bearish weekly EIA oil inventories report, which showed an unexpected large build of 7.1 million barrels in crude stocks for the week ending October 17th while the US refinery utilisation fell by 1.4%. Energy stocks in the London equity benchmark index managed to hold in positive territory with Royal Dutch Shell, BP and Petrofac climbing higher between 0.3% and 1.05%.   

Precious metal prices reversed and slid lower in today’s session giving back recent gains. Gold spot retested the $1240/ounce level, while silver fell towards $17. Base metal prices were all higher with the exception of copper which was falling towards $6640. 

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