Global equity markets got off to a jittery start on Monday with Asian benchmark indices heading lower after data showing Japan slipped into recession in the third quarter reignited fears of the condition of the global economy. The data hit crude oil prices particularly hard with front month Brent futures giving back Friday’s gains as selling pressure saw prices extend back below $78.50/bbl. Japan’s economy unexpectedly shrank by an annualised 1.6% during Q3, building on a 7.3% contraction during the previous quarter which pushed the yen to a fresh low against the dollar as it traded briefly above 117.00 for the first time in seven years. However, the weakness was quickly recovered with swings pushing the yen to strengthen towards 115.50 before eventually settling slightly below the open towards the end of the European session.
After rallying 2.2% on Friday, adding over $25 to spot prices in one day, gold prices held firm around the previous session’s close, finding firm support just below $1,190/oz around opening levels. Swings either side early on in the European session were prompted by movement in the dollar against major peers but buying interest seems to be holding firm and provided the yellow metal can build on near term support levels we could see a recovery of some of late October’s precipitous declines after consolidating above $1,150/oz throughout the first half of November. Investors will be positioning themselves ahead of this week release of the October FOMC meeting minutes which are hoped will offer further insight into the Fed’s monetary outlook after their monthly asset purchasing programme came to an end.