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Risk Aversion Continues Pressuring Stocks and Lifting Gold

By:
David Becker
Published: Aug 10, 2017, 11:08 UTC

European stock markets continued to head south. Risk aversion amid the standoff between the U.S. and North-Korea seemed to ease slightly and Nikkei and

Thursday Support and Resistance Levels – August 10, 2017

European stock markets continued to head south. Risk aversion amid the standoff between the U.S. and North-Korea seemed to ease slightly and Nikkei and ASX managed to close with marginal losses of -0.05% and -0.08%, and while Hang Seng and CSI underperformed both close above intraday lows. In Europe, though stock markets extended opening losses and the FTSE 100 failed to benefit from better than hoped production numbers, which lifted Sterling. In the Eurozone, it was once again the DAX that underperformed. The index extended the downtrend that had been in place since the record high on June 20 and is back at levels last seen in April. The euro may have fallen back below 1.18 against the dollar, but the strong currency and ongoing woes at carmakers continue to add to geopolitical pressures. Oil prices are slightly higher on the day, with crude trading at USD 49.80 per barrel. Gold prices continued to rise notching up a 2-month high.

UK Industrial Production Beat Expectations

UK June industrial production beat expectations in rising 0.5% month over month, up from 0.0% month over month in May, and expanded by 0.3% in the year over year comparison after declining by 0.2% year over year in the previous month. The respective median forecasts had been for 0.1% month over month and -0.2% year over year. The narrower manufacturing output gauge was 0.0% month over month and +0.6% year over year, which undershot the median forecast for 1.1% year over year growth. A decline in car making activity drove the weakness in the manufacturing figure.

The UK Trade Deficit Grew More than Expected

Trade data, released at the same time, showed the overall deficit blowing out to an eight-month peak of GBP 4.6 billion. The ONS stats office estimating that the data imply a downward revision of 0.1 of a percentage point to the Q2 GDP calculation.

ECB to announce QE follow up in September.

The ECB is expected to announce its follow up to quantitative easing in September accord to the latest Reuters poll. The majority of economists expect the central bank to make an announcement about the future of QE in September 15. Most of the remaining predict an announcement early in 2018, although the latter seems unlikely considering that the current program runs out at the end of the year and the ECB promised to clarify the future of the program beforehand. At the last ECB meeting, it appeared that policy makers favored October as the appropriate time to make a decision on the future of QE, which squares with Draghi’s hints that a decision would come in autumn.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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