Weaker US economic data raises global growth fears, risk-appetite falls
The US ISM manufacturing PMI fell to 46.8 versus market estimates of 48.6, while jobless claims climbed to 249k, above the market’s 236k expected, raising global growth fears. Wall Street was sold off heavily yesterday, with the Dow and S&P down by over 1.0% and the Nasdaq losing 2.3%, while global equity markets and the US futures are all red this morning.
Today’s US unemployment and nonfarm payroll numbers are firmly in focus for clues to the current labour market state. Concerns that the Fed is falling behind the curve by not having cut rates already given the recent US data, are driving the growth concerns. Geopolitical concerns in the Middle East also contribute to the risk aversion and a move back to the safe-haven Dollar. The DXY index is up at 104.30 with the Euro trading around 1.0800 and the Pound at 1.2733. The Yen remains on the front foot, trading at 149.28, but EM currencies are once again under pressure this morning. The Rand, which had firmed to near R18.10 yesterday, has weakened back to R18.28 levels this morning in line with the weaker EM currencies.
US growth fears and Middle East tensions underpinning Gold
Gold is trading firmer at $2,461 this morning on the back of the safe-haven demand. Platinum and Palladium are both firmer as well, but base metals prices have all opened in the red. Brent crude remains fairly range-bound at the $80.00 level, with demand concerns offsetting the geopolitical tensions.