GOLD
Gold prices are hovering close to the multi-week maximums reached on Wednesday as the financial markets continue to ponder the impact of the latest economic data released in the US. Disappointing employment and GDP numbers mean a lower likelihood of further rate hikes by the Federal Reserve, resulting in softer treasury yields and losses for the dollar in relation to other major currencies. This scenario offers support to gold prices due to the precious metal's inverted correlation with the greenback. However, the upside for bullion is capped in the short term, as investors will now be waiting for the release of the Non-Farm Payrolls data on Friday. Should the US labour market give more signs of weakness, there may be scope for further gold gains. However, even in the medium-to long-term, these gains will be limited because even if the Fed doesn't hike again, rates will remain elevated for a prolonged period.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
Markets opened sideways in Europe on Thursday, extending the choppy trading session in Asia, while US futures were also flat as investors digest the latest macro developments and brace for some new important ones today and tomorrow.
Market sentiment remains muted as investors seem torn between poor macro data showing slowing economic activity in China, the US and the EU and the prospect of a less hawkish approach from central banks.
This paradox between bad economic development and the anticipation of easing interest rate hikes is likely to support market sentiment towards risk on a short to mid-term basis. However, this situation may dramatically change if investors start noticing a significant negative impact on corporate profits, as earnings will need to remain strong and optimistic to support the current bullish trend on stocks.
Today will likely become a volatile trading session for stock traders as many are already braced for the EU CPI and unemployment report alongside the ECB’s July meeting minutes, while US personal spending and income and initial jobless claims loom in the afternoon.
On the technical front, the STOXX-50 still trades inside its 50-point range between 4,300 pts and 4,350 pts following a rebound over the lower bound yesterday. A break-out of one of these zones could bring further directionality to the European benchmark.
Pierre Veyret– Technical analyst, ActivTrades
Source: ActivTrader
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