Markets await Scottish referendum

Wednesday, September 17, 2014

European equity markets rebounded in today’s trading session and posted strong gains ahead of the results of the US Federal Reserve policy meeting later this evening. The CAC, DAX, IBEX climbed higher between 0.4% and 1.1%, while the London equity benchmark missed the uptrend and ended the trading session fairly flat as investors remained cautious following ongoing uncertainty regarding tomorrow’s Scottish referendum. 

On the macroeconomic front, the US National Association of Home Builders (NAHB) housing market index showed strong signs of improvement in the US housing market as confidence climbed to 59 in September compared to 55 in August, hitting a 9-year high. The US dollar rallied against a basket of currencies and hit an 8-year high against the yen.

NAHB Housing Market Index

USHBMIDX Index (National Associa 2014-09-17 15-10-54

In the UK, the ILO unemployment rate fell sharply to 6.2% in July compared to 6.4% in June, beating analysts’ expectations and verifying optimistic signs for the UK employment conditions.

In the Eurozone, construction output rose by 0.4% y/y in August compared to a decline of 2.3% in July. However, the EUR remained under pressure against the USD trading around 1.2950. 

Precious metals were consolidating within the recent range as gold spot was fairly flat at $1236/per ounce, while silver remained below the $19 level. However, copper extended gains and rallied towards 6,950, while aluminium and zinc remained under pressure.

Tomorrow, all eyes will be on the crucial Scottish referendum as polling stations in Scotland will be open from 7am until 10pm for the public tomorrow to cast their vote on Scotland’s independence. According to recent surveys, turnout is expected to be huge, therefore the unofficial estimated time of the result is expected to be around 7am on Friday morning.

GBPUSD Spot

GBPUSD Curncy (GBP-USD X-RATE)   2014-09-17 17-08-39

Furthermore, investors will be keeping an eye on the results of the UK retail sales as well as US housing starts in August and Philly Fed data in September, while the weekly jobless claims data could give an outlook of the US employment conditions. 

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