In the absence of US markets due to the Labor Day holiday, European markets have seen a positive session after a decent hand off from markets in Asia, with the Nikkei225 closing at its highest level since mid-April, with the FTSE100 hitting its highest level since 18th August.
Europe
It’s still been a fairly quiet day, with the biggest faller being Berkeley Group in the wake of last week’s full year numbers, and the stock going ex-dividend.
Aluminium prices have hit a ten year high after a coup in Guinea raised concerns of a threat to bauxite exports from the country. Bauxite is a key component in the production of aluminium, however the effect on the mining sector has been fairly minimal with only Glencore making any meaningful gains.
Among the best performers JD Sports has hit another record high, ahead of its H1 numbers next week, shrugging off concerns that it will have to offload its newly acquired Footasylum business.
Luxury stocks are also getting a bid with LVMH, Kering and Burberry all higher as investors reassess the outlook for demand in China, and Asia more broadly in light of recent share price declines across the sector.
ITV is the best performer for no other reason perhaps than it initially traded at a one month low in early trade, which appears to have prompted a little bit of bargain hunting.
US
US markets are closed.
FX
The US dollar has rebounded from its Friday one-month lows, as some short covering starts to kick in after six consecutive daily declines. The biggest gains are coming against the likes of the Australian dollar, which appears to be slipping back ahead of tomorrow’s RBA rate decision.
The Aussie has seen a big rebound in the last two weeks after hitting a nine-month low last month. It seems unlikely that the RBA will signal anything other than a maintenance of the status quo given the various restrictions that have been imposed in the last month or so. At the last meeting the central bank signalled that it would stick to its plans to start tapering bond purchases from $A5bn to $A4bn a week. There is some speculation that they could reverse this decision given the recent new lockdowns, however if they do decide to maintain the status quo that might mean they think the recent slowdown is merely temporary, thus helping to continue to support the recent rebound in the currency.
Commodities
On a fairly quiet day for commodity markets in general, oil prices are slightly softer after Saudi Arabia took the decision to reduce October prices for Asia delivery by around $1 a barrel. Markets appear to have interpreted this that there might be rising concerns about the demand outlook, especially since September output has already seen another increase of 400k barrels a day. On the plus side this should alleviate some of the concerns about higher prices exerting upward pressure on inflation.
Aluminium prices have also hit a ten year high on the back of the reports of the coup in Guinea.
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