Gold price breaches 1300.00 handle, insurers drag down the U.S. indices as a consequence of hurricane Harvey

Aug 29 • Morning Roll Call • 1428 Views • Comments Off on Gold price breaches 1300.00 handle, insurers drag down the U.S. indices as a consequence of hurricane Harvey

As the tropical storm named Harvey continued to batter the USA’s fourth biggest city of Houston, investors and analysts began to survey where the damage, in terms of the financial cost, would hit hardest. Insurance companies’ valuations were naturally heavily hit on the SPX and DJIA index, as the initial cost of the catastrophe is estimated at $30b, however, other estimates suggested upwards of $100b as the final cost. The biggest gainers on the USA markets were oil refiners, with operations further away from the epicentre of the storm, which occurred in the gulf of Texas. The DJIA closed down 0.10%, SPX down 0.04% whilst the tech heavy NASDAQ rose by 0.22%.

Gold attracted buyers as a safe haven asset, rising by circa 1.5% to a close on ten month high, breaching both the critical $1300 handle and R2, to end the New York session at approx $1310 per ounce. WTI (west Texas intermediate) oil fell by circa 2.5% to $46.81, as a consequence of the disruption and havoc Harvey has unleashed, whilst natural gas prices surged on the markets. The dollar index fell by circa 0.2% on Monday, EUR/USD rose to R1 and by circa 0.5% on the day to 1.1978, the euro made modest gains versus the majority of its peers during Monday’s trading sessions. GPB/USD continued its recent recovery, to end the day positioned at R2 and up approx. 0.6% at 1.2936. USD/JPY ended the day resting on S1 and down approx. 0.3%, at 109.12.

In terms of economic calendar news, Monday was a relatively light news day, with London markets closed due to a U.K. bank holiday. Only the USA advanced goods trade balance, coming in (missing the forecast) recording a -$65.1b deficit for July, was listed as high impact. However, the subject of Brexit reappeared on Monday, as the two leading negotiators; Barnier for the E.U. and Davis for the UK’s government, begin their third recent round of talks (in as many months), with Barnier now beginning to sound even more frustrated by the UK’s apparent: ambivalence, ambiguity and wholesale unprofessional approach towards the process and details. Once again, he’s found it necessary to remind and lecture the U.K. govt. that until the framework regarding: free movement of people, permanent residency and the final exit costs are agreed, then talks on a trade deal remain, from the UK’s perspective, a fantasy.

Economic calendar events for August 29th, all times quoted are London (GMT) time

06:00, currency impacted EUR. German GfK Consumer Confidence Survey (SEP). The previous month’s reading of 10.8 is forecast to remain unchanged.

06:45, currency impacted EUR French Gross Domestic Product (YoY) (2Q P). France’s annual GDP growth is forecast to come in at 1.8% for the second quarter.

13:00, currency impacted USD. S&P/Case-Shiller Composite-20 (YoY) (JUN). The main reading out of a series of house price data published by Case-Shiller, the expectation is that (annually) house price growth across the twenty largest USA cities, will have fallen to 5.6%, from the 5.69% reading registered in May.

14:00, currency impacted USD. Consumer Confidence (AUG). The conference board consumer confidence index is the most highly respected sentiment reading regarding the USA economy. The prediction is for a slight fall to 120.6, from the 121.2 recorded for the month of July.

23:50, currency impacted JPY. Retail Trade (YoY) (JUL). Retail sales are forecast to reveal a fall of 1.0% for the month of July, from the 2.2% reading recorded in June.

23:50, currency impacted JPY. Large Retailers’ Sales (JUL). The expectation is for sales to come in negative at -0.2%, a fall from the 0.2% figure posted in June.


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