Market Cycle Sours

Buoyant sentiment in US shares soured during the Asian session as weak manufacturing data around the globe weighed on investors. Currency trading remained subdued, as shares and commodities took the brunt of selling pressure. Gold featured as sellers dragged the yellow metal 2% lower over the 24 hour trading session. Disappointing NY ISM data and weaker than expected Vehicle Sales were ignored as US investors focussed on a lift in factory orders, boosting share prices and reversing negative trends in industrial metals. However, investors in the Asia Pacific region appeared to take a more global view, and the ISM echo of recent weak PMIs in China and the US rattled markets. The exception is Japan, were the Nikkei 225 added more than 2.5% ahead of a Bank of Japan meeting tomorrow. New BoJ head Kuroda has flagged “bold” stimulatory measures, and stocks continued recent volatility as traders re-positioned themselves ahead of tomorrow’s announcements. In contrast, Yen traded quietly against both the EUR and USD. Currencies stuck to tight 0.25% to 0.5% ranges. CHF weakened against crosses and the USD while holding steady against the EUR. The AUD and CAD gained ground against EUR and other European currencies, while GBP fell modestly against USD ahead of the release of construction PMI data today, expected to lift from last month’s 46.8 to 48.0. Oil came under pressure as copper rose, but falls in gold put pressure on silver and platinum, and precious metals remain the focus for commodity traders. Negative leads could see European bourses reverse some of yesterday’s gains at open, although crucial PMI reads and BoE and ECB rate decisions tomorrow may keep some participants on the sideline. Germany, France and Italy will report individual PMIs alongside European Union numbers. Futures markets are pointing to falls of around 13 points for the UK, 28 points on the DAX and 15 points on the EuroStoxx 50.