06.09.13 Friday Morning

This week will likely be remembered for the start of the G20 meetings and the first opportunity where world leaders have had a chance to debate whether the actions in Syria merit external military intervention.

Monday began with a bit of a bang, despite the US markets being closed due to Labour Day, as the best Chinese PMI manufacturing data from the last 16 months and a 28-month manufacturing PMI high from the UK stunned investors.  It seems investors are still of the opinion that the world economy is struggling against the backdrop of the credit crisis, whereas in reality, perhaps this is no longer the case.  

On Tuesday, volumes were slowly pumped back into the markets as an end to summer holidays marked a hopeful return to the markets by investors.  Although the same level of optimism towards equities was not observed on Tuesday, compared to Wednesday, the markets did still show signs of a risk-on appetite.  However, the same could not be said towards Gold as the precious metal continued to decline as investors deemed the 21% surge in value over the last three months as excessive.  As a result investors continued to trim Gold from their portfolios.

At the midweek point, news that Russia’s embassy in Damascus was attacked surprised investors and led to a sell-off.  Although details later emerged that there were no casualties, the attack was a stark reminder to investors that the problems in Syria will not simply halt until the West has made a decision regarding their military stance. 

On Thursday, ECB President Draghi alerted investors to the fact that the Euro Zone is still struggling below expectations and that the bank’s monetary easing policies would continue.  Draghi did raise growth forecasts for 2013.  However, an immediate lowering of 2014 forecasts led to the Euro shedding the day’s gains.

On Friday, at the time of writing, volumes were proving thin as investors awaited the release of the ever-important Non-farm payroll data.  Arguably the data is even more important this month as it is the last major data release before the next FOMC meeting where Bernanke is reported to make a final decision regarding tapering.  This, alongside the final day of the G20 meetings where leaders are likely to make their stance on Syria clear, is paving the way for a potentially volatile end to the trading week. 

Equity of the week should probably go to SolGold.  The small cap mining company has doubled in the past month despite a turbulent year after reporting a series of positive news.  The surge began on Monday after the company started drilling at its Apala prospect on the 1^st of September.  In addition, SolGold is confident that in the next 10 to 20 days they will be able to provide visual confirmation of the mineralisation zone.

Next week, investors will have a series of data to grapple with.  This will include growth data from Japan and trade figures from China.  In addition, the markets could finally get an answer as to whether the US, and its allies, will be launching a military campaign toward Syria. 

Thus, perhaps above all, energy traders should have all hands on deck next week.