Market participants around the world continued to adopt a risk off approach to global markets as the lack of major economic data releases today saw European benchmark indices dip lower at the open. Regional indices were buoyed by airline shares which gained ground after crude prices dipped to a four year low with the CAC, DAX and FTSE 100 reversing early declines towards the end of the session, however, direction reversed once again on the opening of the US session and these late gains were promptly returned.
However, investors remain cautious of the fragile market conditions with spot gold prices building on recent support levels throughout the session. Intraday gains early on saw the yellow metal rally towards $1,238/oz, trading towards a three and a half week high as investors sought out safe havens. Gains were further bolstered by a weaker dollar index which pared most of Friday’s gains, testing levels towards 85.410. The dollar index seems to have settled into a sideways pattern since the start of October, underpinned by support on the downside towards 85.50 while the majority of moves on the upside have been limited by resistance around 86.00.
US equity markets started the week slightly on the back foot as investors shunned the buying opportunities in the S&P 500 and DJIA at the current lower levels. At the time fo writing both indices were trading between 0.3%-0.4% lower after US equity markets suffered their worst weekly sell-off since May 2012. Markets struggled to gain upside support from the better than expected Chinese trade data which indicated exports grew by 15.3% y/y in September while imports gained 7.0% y/y during the same period. Perhaps tomorrow will mark a better session for global markets, with the release of the German ZEW sentiment index as well as UK retail sales and eurozone industrial production data which will all provide further clarity on the global economic growth outlook.