Whilst USA markets were closed on Monday (owing to a bank holiday) the telecoms sector was alight with news that Vodafone sold its shareholding in Verizon. The figure was $85bn, a huge figure for the shareholding.
But put into perspective by the timely reminder that this sum is only equivalent to one month of the asset purchase/monetary easing currently provided by the USA Fed…
European markets enjoyed a very positive day on Monday on the basis of: Markit’s publication of such positive PMI data, no tapering ‘news’ and little in the way of escalation of the Syrian crisis. The lack of Syrian escalation helped the Istanbul stock exchange to be the best performer of the day; closing up 3.24%. The UK FTSE closed up 1.45%, the CAC closed up 1.84%, the DAX up 1.74%, IBEX up 1.68%, MIB up 1.84% and the European STOXX index closed up 1.94% on the day.
Equity Index Futures
Looking towards the equity index futures the DJIA is currently up 0.76%, the SPX 500 is up 0.95% and the NASDAQ equity index future is up 1.13%, suggesting that (unless dramatic negative news breaks before hand) the USA index markets should open up in positive territory. Similarly European equity index futures are bullish, the UK FTSE up 1.40% and the DAX up 1.44% and STOXX up 1.54%
Commodities enjoyed mixed fortunes in Monday’s trading sessions with ICE WTI oil closing down 0.79% at $106.80 per barrel. NYMEX natural closed up 2.51% at $3.67 per therm. COMEX gold closed down 0.32% at $1391.60 per ounce, whilst silver closed up 2.71% on COMEX at $24.11 per ounce.
Forex focus
Sterling appreciated by 0.5 percent to 84.76 pence per euro late in the London session after reaching 84.72 pence, the strongest level seen since June 26. Sterling rose 0.2 percent to $1.5536. Sterling rose to the strongest level versus the euro in two months after the PMI index of U.K. manufacturing expanded by the most since February 2011, adding to signs that parts of the UK economy are recovering. Sterling has strengthened 6.5 percent over the past six months, the best performer amongst the ten developed-nation currencies tracked by Bloomberg’s Correlation-Weighted Indices. The euro has gained 4.2 percent and the dollar has climbed by 2.7 percent.
Australia’s dollar rose 0.9 percent to 89.83 U.S. cents late in the Sydney session after touching 88.93 on Aug 30th, matching the least level since Aug 5th. It gained 1.8 percent to 88.97 yen. The kiwi climbed 1.1 percent to 78.09 U.S. cents, set for its biggest gain since July 25th, and leapt 2 percent to 77.36 yen, the largest advance since April 8th. The Australian and New Zealand dollars rallied from losses last week after the Chinese government data and the HSBC sponsored Markit PMI showed manufacturing reached a 16-month high, boosting the outlook for exports from both of the South Pacific nations.
The Swiss National Bank (SNBN)’s ceiling on the franc will only stay in place as long as it is needed, according to the Vice President Jean-Pierre Danthine;
[quote]“The cap isn’t there forever it is there as long as it corresponds to monetary conditions,” Danthine”[/quote]
Danthine’s comment comes after SNB President Thomas Jordan stated in a newspaper interview on Monday that there is “no reason yet” to end the ceiling policy on the Swiss currency. The central bank imposed the cap of 1.20 per euro on the franc in September 2011, citing the need to stave off deflation and a recession.
Fundamental policy and high impact news events scheduled for September 3rd
As European markets awake the key overnight news will have reached investors regarding Australia’s cash rate (base rate) were the expectation is that the rate will remain at 2.50%.
The UK construction PMI will be published early in the UK session with the expectation that the figure of 58.4 will be published, an increase of the previous month’s 57, 50 marking the median line between expansion and contraction. The survey of about 170 purchasing managers asks respondents to rate the relative level of business conditions including: employment, production, new orders, prices, supplier deliveries, and inventories.
The USA ISM PMI is published by Markit, the expectation is that the figure will fall to 54.2 from the previous month’s figure of 55.5.
The Spanish unemployment figure is a medium impact news event and given the appalling levels of unemployment in Europe and Spain in particular analysts will be looking for signs, on the ground at the sharp end of the economic crisis, that Spain is improving. Not withstanding the seasonal factors; Spain traditionally witnesses employment improving in the summer months, the figure is expected to show a fall of 5.2K.
