European indices slide after soft PMIs; Silver surges higher

Summary:

• European data disappoints weighing on stocks and Euro

• US indices dragged lower but bounce after their PMIs 

• Precious metals rally with Silver leading the way

• MS lowers target on Amazon

A slight improvement in the PMI surveys in August raised recovery hopes among investors counting on a combination of fresh money printing from the ECB and improving economic prospects. These hopes have just been dashed as flash European PMIs for September are outright awful. Both indices in manufacturing and services deteriorated in Germany and France and the most important of them all – German manufacturing, tumbled to a scary 41.4 points. That is a recession-like level and after months of hovering around 43-44 points it’s crystal clear that this is not a coincidence but a steady deterioration. With the monetary policy easing already “consumed” by the markets investors may now wake up to the idea that it doesn’t happen without a reason.   

A spate of negative economic releases from the Eurozone have weighed on stock indices so far today with some sizable selling seen on the continent and the US markets trading lower ahead of the opening bell. A strong recovery from the dip after the Fed decision last week had bulls hoping for news record highs, but the S&P500 stopped just short of its prior all-time peak of 3029 as sellers stepped into the market. The market has moved off these lows, perhaps aided by the latest US PMI readings which while not great, were still favourable compared to the equivalent seen in Europe. 

There’s been a clear move higher in the precious metals complex in recent trade with Gold, Silver and Platinum all moving up to their highest levels of the day. Silver seems to be leading the charge with the market adding more than 3.5% and moving back up above the 18.50 level to trade at its highest level in a fortnight. Elsewhere, Gold has moved up through the $1520 level to trade at levels not seen in over a week. 

Some negative data from the Eurozone this morning could be attributed as a factor behind the moves while comments from the incoming ECB president in which Christine Lagarde has cautioned that the trade war is weighing “like a big, dark cloud” on the global economy have done little to raise sentiment.   

Starting off the new week there’s a batch of analyst calls that have been made public on US stocks that could be worth following this afternoon. The most eye catching is focused on Amazon after Morgan Stanley lowered their price target on the tech giant. “Focusing on the long-term while acknowledging the near-term could be volatile. Our lower near-term profitability drives down our sum-of-the-parts-driven AMZN PT to $2,200 per share (from $2,300 per share) as we remain OW (with ~20% upside). This is because over the long-term, AMZN’s push toward 1-day (effectively raising shopper expectations) will likely only deepen their moats and share-gains against competitors.” Amazon shares are trading lower by around 0.8% at the time of writing.