European equity markets managed to extend the broadly optimistic sentiment that has dominated the start of the week into today’s session with the CAC, DAX and FTSE all posting firm gains throughout the day before dipping slightly towards the close. Yesterday’s release of better than expected US economic data was followed by stronger Japanese industrial production overnight, setting the stage for today’s FOMC statement. The dollar index slipped lower today, trading below 85.30 at one stage after briefly testing resistance above yesterday’s close early on as investors positioned themselves ahead of the Fed funds target rate announcement.
Wall Street opened flat ahead of the Fed statement, due out later this evening, with the S&P 500 and DJIA both rising slightly as the session progressed before erasing these early gains towards the end of the European session. Spot gold prices looked set to continue the recent sell-off after yesterday’s modest gains snapped a four session bear run. Prices attempted to converge on levels towards $1,229/oz early on in the European session, however, renewed optimism saw investor interest in the yellow metal wane as prices subsequently traded towards $1,221/oz before settling around $1,225/oz towards the end of the day. SPDR holdings have dropped 3.4% since the start of the month as recent data releases point towards a steadily improving US economy, prompting investors to go in search of higher yields.
Tomorrow sees the release of advanced US Q3 GDP and personal consumption data as well as weekly initial jobless claims which will ensure investors remain engaged throughout the remainder of the week. Market participants polled by Bloomberg expect initial jobless claims to increase by 285K against the previous week’s increase of 283K while Q3 GDP is expected to increase 3.0% q/q and personal consumption is anticipated to accelerate 1.9% q/q.