Quiet start to the week on Labour day

Summary:

• US indices edge higher in quiet trade due to Labour day

• Europe mixed as Fitch cuts Italy’s rating

• CBRT vows to act as Turkish inflation jumps

• UK manufacturing survey falls to 2-year low

• Small losses seen in crypto space

US stock indices have begun the week in a fairly quiet fashion, with some small gains seen in the three largest benchmarks. The US500 is back above the 2900 level after flirting with a move lower on Friday while the US100 also trades less than 1% from its record all-time high of 7696. Last month was the best August performance in 4 years for US markets, and as we now come to the end of the summer traders will be keenly watching to see if the latest breakouts higher can gain traction. Volumes are expected to be a little lighter today with the US having a bank holiday for labour day. This is only 1 of 9 days throughout the year that the New York Stock Exchange (NYSE) is closed.

European equities have begun September mixed as investors stay cautious anticipating that Donald Trump could move ahead with tariffs against China concerning $200 billion goods. On top of that, we were also offered quite adverse Brexit revelations suggesting that there is still a lot to do in order to get a final agreement (the topic was brought up in a more detailed manner in our morning post). Last but not least, final PMIs coming from European economies turned out also weaker than expected, the overall Eurozone index for manufacturing stayed unchanged at 54.6 though.

Turkish lira found itself in the spotlight at the beginning of the new trading week. Namely, the Turkish inflation report for August was published on Monday morning and it did not paint a rosy picture for the Turkish currency. However, what one may find more interesting is the Turkish central bank announcement that came not long after data release. The price growth in the Turkish economy once again accelerated in August. The headline CPI print showed a 2.3% MoM increase against 0.55% MoM we have seen in the previous month. On the year-over-year basis the inflation reached 17.9% YoY while in July it was 15.85% YoY. Markets expected 2.23% MoM and 17.6% YoY increase therefore one can see that the price growth actually exceeded forecasts.

The latest data on the UK manufacturing sector has come as something of a disappointment with the PMI reading for August coming in at 52.8 compared to a consensus forecast of 54.0. The prior reading was also revised lower for good measure to now stand at  53.8 from 54.0 previously. This reading is the lowest in two years and has put more pressure on the pound this morning with the currency already beginning the new week lower after the latest Brexit developments over the weekend. According to the report job creation has also slowed to “near-stagnation” in what could be described overall as a fairly downbeat assessment from IHS on the current manufacturing environment.

There’s been some weakness seen in the crypto space today with all 5 markets edging slightly lower. The declines are fairly measured however, at least by cryptocurrency standards, with losses less than 2% seen in all of these markets at the time of writing. In the fundamental news Russia are making headlines where the local watchdog, called Rosfinmonitoring (Federal Financial Monitor Service), wants to develop a cryptocurrency tracking tool, as reported by BBC Russia. For this purpose, the Russian watchdog granted nearly 200 million rubles for the Moscow Institute for Security and Information Analysis (SPI).