FTSE 5708 -3
DAX 6966 -5
CAC 3414 +1
IBEX 7377 -44
Oil 96.43
Gold 1691
Asian markets have had a volatile session as market participants react to all the developments from the weekend. There
is plenty of analysis and opinion on Ben Bernanke’s dovish commentary at Jackson Hole. Most analysts now feel that
further asset purchases in the September meeting is a ’50/50’ call, while an extension of the rate guidance language is
very likely. As usual, disappointing economic data from China has been greeted by calls of further easing today. After a
couple of months’ worth of stimulus efforts, albeit not full-on, the lack of any rebound in activity may spur the
government into action, lest the fears over structural issues intensify.
Most of the risk currencies were flat this morning except the Aussie dollar which slid further. The AUD is really
feeling the pressure of a slowing Chinese economy and some disappointing local data. Looking at the equities in the
region, Hong Kong’s Hang Seng is outperforming with a half a per cent gain, while the ASX 200 is up 0.3%. The Nikkei is
relatively flat, while the Shanghai Composite has climbed 0.8%. An appreciating yen against the US dollar seems to be
capping the Nikkei today. The Hang Seng has been lifted by data signalling China’s economic slowdown, which has led to
speculation that the government will take further action to spur growth. With increasing hopes of China and US easing,
European markets are pointing to a relatively flat to mildly weaker open. There are plenty of PMI numbers to look out
for in Europe later today. This might give the euro some direction after having been flat through the Asian session. US
markets are closed today for a Labor Day bank holiday.
The market is not entirely fully expectant of the announcement of the modalities of the ECB's new bond-buying programme,
especially with other variables still in play. September and October promise to be two of the busiest months in terms of
eurozone policy making that the crisis has seen so far. Things to watch out for in this timeframe include the September
6 ECB press conference, the German constitutional court decision, Greece's Troika programme, a potential request by
Spain for EFSF/ECB bond-buying assistance, and another EU summit. Spain will reportedly consider seeking extra aid from
Europe on top of a EUR100 billion rescue of its financial sector, but does not see any need for new conditions, Prime
Minister Mariano Rajoy said in an interview published in European newspapers on Sunday. Mr Rajoy said he wanted to see
details of the European Central Bank's programme to buy debt of eurozone countries with high borrowing costs before
deciding whether to proceed with a request.
China's weaker-than-expect manufacturing PMI over the weekend was only the start of an intense week for AUD-related data
and news flow. AUD/USD took another leg lower this morning on the back of softer-than-anticipate retail sales data.
Despite the Aussie dollar lagging, the local market managed to spring into positive territory after having endured a
tough morning. Although BHP Billiton is still down 1.2% for the day, the stock is technically in positive territory as
it is only down 39 cents after going ex-dividend for 57 cents. The gold miners have been the stars of the session with
most of the mid-tier miners surging on the back of a stronger gold price. OceanaGold, Kingsgate and Medusa Mining are
among the leaders. Retailers are having a tough day on the back of the weaker-than-expected retail sales numbers. Harvey
Norman, JB Hi-fi and Myer are down 2% to 3%. Tomorrow brings the RBA’s interest rate decision where the Central Bank is
widely expected to stay on holiday. Any dovish comments could weigh on the AUD further.