Spreadex Market Update
Post yuan-devaluation commodity sell-off continues to weigh on markets
In fact, following a big miss in the German ZEW economic sentiment (but an improvement in the region-wide figure), the DAX sunk to 3 digit losses whilst the CAC was similarly lifeless. Perhaps it is just investors being careful; Germany still could block the swift resolution to third bailout negotiations, with the country reportedly preferring to give Greece another bridging loan in order to spend more time on the details of a deal. And with the Eurogroup set to review the situation on Friday, Wolfgang Schauble could still throw a spanner in the works if he exhibits his usual sway over the region’s finance ministers.
Of course the FTSE stood little chance of posting any growth this Tuesday, at least not while the commodities continued to collapse. Brent Crude dipped back below $50 after managing to edge over the line in the early hours of the day’s trading, whilst copper is barrelling towards its recent 6 year lows, despite a significant turnaround in the other metals. This left Rio Tinto and Vedanta struggling (after both had begun to rebound yesterday) with the oil stocks similarly limp.
The US futures suffered in the aftermath of the yuan devaluation, with the country’s exports set to potentially suffer in the face of the weakened Chinese currency. The dollar, on the other hand, posted impressive gains against a basket of currencies, excluding the euro, following this morning’s Chinese news. In terms of the afternoon’s data, the US is offering up the preliminary non-farm productivity and unit labour costs figures, with both expected to be worse than last quarter’s numbers.
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