Markets struggle for direction on weaker US data

Thursday, February 13, 2014

Global equity markets traded with mixed sentiment today as the release of US economic data compounded a bearish investor view after weaker than expected corporate earnings saw European markets open lower. BNP Paribas opened down 4% after a surprise drop in profits, while both Cisco and Rolls Royce Holdings revised forecasts downwards which left market participants struggling to find a catalyst for moves higher. London’s blue chip index snapped a six day rally, closing 0.23% lower after trading as much as 1% lower after aggressive selling pressure yesterday indicated a reversal was impending. Both the CAC and DAX spent most of the day in negative territory before rallying significantly towards the close, ending the day 0.17% and 0.6% higher respectively.

US markets opened sharply lower after the release of US retail sales and initial weekly jobless claims, both of which came in worse than expected. Retail sales declined 0.4% m/m in January from 0.2% growth the previous month while initial weekly jobless claims rose to 339K for the week ending Feb 8th, 9,000 more than analyst expectations according to a Bloomberg poll. Wall Street has since recovered as investors had largely factored in the weaker than expected labour market and retail data, with both the S&P 500 and DJIA trading between 0.1% and 0.2% higher at the time of writing. Upside moves may remain under pressure in what is expected to be a choppy trading session after yesterday’s relatively narrow range saw the S&P 500 pull back after testing levels above 1,825.

Spot gold prices gained further ground after yesterday’s minor correction which saw a doji pattern develop as nervous investors struggled to decide on a clear direction. However, with the release of weaker US economic data, gold bulls seem in control with prices building on $1,290 as they look to test $1,300 in the coming sessions.

Gold prices continue their rally after a brief pause yesterday, targeting $1,300

XAU Curncy Gold Spot Oz 2014 02 13 17 00 40

Topics: Equities, Gold
More from: Kash Kamal