Weaker than forecast China inflation and higher than expected US jobless claims squashed market enthusiasm in overnight trading. European shares fell hard as investors moved toward havens, lifting the US dollar, gold and bonds. However weekly energy data painted a robust demand picture, and the pressure on growth exposures eased in late US trading.
The shuttering of oil production facilities ahead of the landfall of hurricane Delta last week meant traders were expecting a draw on crude oil inventories. The 3.8 million draw was in line with expectations. The surprise came in a drop in petrol reserves of 1.6 million barrels, and a whopping 7.2 million pull through of distillates. Crude oil prices firmed, but oil and gas producers surged, and the rosier economic picture saw pressure on banks ease. US share market indices recouped losses.
A rising US dollar weighed on commodity currencies, despite overall support for mineral and agricultural goods. The Euro strengthened slightly against the British pound, as post Brexit trade negotiations continued through the UK imposed deadline. Emerging cryptos were hit, and NEO, Stella Lumens and Ripple fell 2% - 4%.
Asia Pacific shares are heading for a muted started to trading, reflecting the late change in market sentiment. Australian shares outperformed yesterday after the RBA governor hinted at a November rate cut in cash rates from 0.25% to 0.10%. While the symbolism of the move is significant, the quantum may mean yesterday’s moves were the result of a sugar hit.