Morning Markets: Oil fast losing sight of $50/b
- Eurozone: Composite PMI (0800 GMT)
- UK: CBI Industrial Trends Orders (1000 GMT)
- US: New Home Sales (1400 GMT)
Oil's about-turn in the last two days is gathering pace pushing US benchmark below $47/barrel and sending its European counterpart Brent towards $49/b as the $50/b-plus highs of last week disappear over the horizon.
The return of Nigerian barrels, ramped-up production in Iraq and the Saudi-led destruction of the short position in the last week has shown the 20%-plus rise up for what it was — the rallying equivalent of the Emperor's new clothes. With profit-taking prevalent and downside seemingly set for the next few days, analysts have WTI slated for a base somewhere around the $45/b mark.
It's a volte-face in currency markets too after dollar's early strength this week was frittered away amid anxiety heading into the Jackson Hole symposium and the pivotal Janet Yellen speech on Friday. USDJPY was once again coiling just above the 100.0 handle in the hour before the European open, EURUSD had regained its hold above 1.13 and GBPUSD had established a base at 1.3150.
Speculation on a Federal Reserve move on rates has put markets seemingly on hold after the dramatic intervention by Fed vice chairman Stanley Fischer at the weekend continues to reverberate. Nikkei and Hang Seng were both subdued overnight and the Shanghai Composite Index was just into positive territory. The Shenzhen Composite Index meanwhile is still holding above 2,000 as the froth from last week's Stock Connect announcement with Hong Kong starts to dissipate.
Such conditions might seem conducive for gold to return higher but the precious metal has been unable to break the $1,340/oz area. Bonds likewise are largely static as the holding pattern prevails. Important PMIs are on tap Tuesday in Europe and the US but it might take real outliers to move the needle significantly before Friday.
Finally, shares in Switzerland's chemical giant Syngenta went on a bit of a tear after the US national security regulator waved through a $43 billon takeover by China National Chemical Corporation (ChemChina). The share price spiked to a 15-month high of $422 on the back of ChemChina's $465 offer where it has held as we go into the European session. The deal is expected to complete by end-2016 if it can overcome other antitrust probes.
- Japan's Flash Manufacturing PMI came in at 49.6 in August (It was 49.3 in July)
- The net worth of the world's richest person – Bill Gates – has hit $90 billion
- Australian consumer confidence is at a three-year high, up 3.6% last week
- Asian markets opened mixed; the Nikkei was down as the yen strengthened
- Silver saw a big pullback losing 2.3% overnight, but added 0.4% in Asian trade
- Gold held near a one-week low, zinc advanced as much as 1.2% in London
- WTI crude oil slid 1.6% to $46.69/b in mid Asian trading
- Goldman Sachs warns that August's oil price rally "has been overdone"
- Asian energy shares declined, while the dollar weakened versus major peers
- The Nikkei 225 was down 135 points at 0514 GMT or 0.81%
- The Hang Seng was down 0.37% and the Shanghai Composite up 0.2% at 0520 GMT
- The Mumbai Sensex was flat, down just 0.08% at 0520 GMT
- At 0542 GMT, the ASX was at 5,553.30, up 38 points or 0.69%
- The NZD soared on the RBNZ Governor's speech, rising above US73¢
- South Korea’s won strengthened 1% versus the greenback to 100.13
- The Japanese yen rose 0.2% against the USD in mid-Asian trading
- Strong dollar buying interest of last few days in reverse mode
- Options market on dollar calls spiking around Jackson Hole
From the Floor
Rate move. "It's a very confusing batch of Fed rhetoric", says Hardy.
Less dovish. ”RBNZ governor Graeme Wheeler has said a series of rate cuts is not justified” says Horchani.
Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.
Today’s flash PMI data for the Eurozone will provide more context for deciding if the macro outlook is stabilising after a challenging summer of data updates, writes James Picerno.
NZ go slow
New Zealand central banker Graeme Wheeler will lower interest rates, but says he won't be rushed - comments that pushed the NZD higher, says Saxo's Singapore team
Out of steam
The likely return of Iraqi and Nigerian barrels in tandem with a Saudi-led spent short-covering oil rally is driving the return to the downside on WTI and Brent, says Ole Hansen. [video]
Actions speak louder
If you want to use Fed rhetoric as a barometer, it is best to ignore what they say and act on what they do, which is almost always nothing, writes Steen Jakobsen.
Morning Markets goes out on the TradingFloor platform at 0700 GMT, Monday to Friday.
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