Oil’s dark clouds show no sign of moving as gold shows signs of life

Despite managing to grow nearly 2% to $71.19 per barrel, oil still remains the focus of a global malaise with the FTSE, DAX and Dow all struggling in the face of the languishing commodity and uninspiring economic data.

Even though the UK posted better than expected manufacturing growth this morning, the FTSE has been unable to shake the bearish sentiment that has plagued it since the start of last week, and with Afren, Tullow Oil and Enquest all suffering, as well as a fresh slip from Vodafone, the UK index didn’t have much hope of rising today, hovering around 6657 after opening at 6669.8.

Despite this slump, and in fairness more reflective of the US markets than any British strength, the pound is up against the dollar by 0.6%, to 1.57348. The FTSE and the pound will be looking towards Wednesday, when George Osborne will reveal the Autumn Forecast Statement, his final one before the general election this year. However, the UK markets shouldn’t be too hopeful; with no money left in the vault, positive features like an extra £2 billion a year to the NHS will cause the squeeze to be felt elsewhere.

Oil is oil is oil, so there was no difference for the DAX today; last week’s Draghi-inspired rally is quickly becoming just a memory as weak data and the global oil crisis weigh the German index down. If the week’s opening is any indication, Thursday’s ECB meeting will be under increasing pressure to show firm action in order to stimulate the Eurozone’s economy.

The previously impervious Dow lost its armour today as oil’s low figures infected the US index like it did the rest of the world last week. It opened at 17765.5, hitting an intraday low of 17716.5 hours after the bell. America’s PMI figures were unspectacular, with ISM manufacturing at 58.7, 0.3 down from last month, whilst final manufacturing PMI was 54.8, only 0.1 higher than last month. These figures could not affect any change in the trajectory of the US markets this afternoon.

The dollar didn’t fare much better today, slipping against the euro and the pound, as well as falling slightly against the yen. The USD/JPY fell 0.8% to 118.2; however, the dollar’s recent consistency against the yen combined with the continually volatile situation in Japan means that the greenback most likely will maintain this position.

Finally, this disappointing day for the dollar meant that gold received a rare chink of light today; causing it to rally by nearly 3% to claw itself closer to the £1200 per ounce level it has been perpetually fluctuating around in the second half of the year. This golden climb may be short lived; brief rallies followed by slow declines have been a constant presence for gold recently, as no major event has given investors cause to maintain bullish sentiment around the commodity.