Gold surges to 6-year high; CAD dips after retail sales miss

Summary:

• Geopolitical tensions send Gold to 6-year high

• CAD dips after retail sales miss

• Euro jumps on upbeat PMI readings

• DE30: Deutsche Bank gains

• Stock of the week: Total

Reports overnight that Trump was ready to issue a retaliatory strike on Iran after an unmanned US drone was shot down caused Gold prices to surge, with the precious metal moving above the $1400/oz handle to trade at levels not seen since August 2013. It’s been a big week of gains for bullion, with the clear dovish shift from the Fed sending both US bond yields and the buck lower and contributing to the 4% rise seen in the price of Gold since Monday. A slowing global economy, imminent US rate cuts and rising geopolitical tensions provide a near perfect storm for Gold bugs and while this trio of factors remain in place the rally seen in recent weeks will remain well supported.

Consumer spending in Canada softened in the month of April according to the latest release, with both the headline and core readings for retail sales coming in worse than expected. The month-on-month figure came in at +0.1% against a consensus forecast of +0.2%, with the prior now standing at +1.3%, revised up from +1.1% first time out. When the prior revision is taken into account this is actually similar to what was expected.

A core reading which takes out automobile sales makes for worse viewing however, with a M/M print of +0.1% vs +0.4% expected. There was also a positive revision to the prior here, which is now 10 basis points higher at +1.8% but even when this is considered the data remains a little disappointing. The bigger picture for Canadian retail sales however remains one of general improvement with year-on-year reading of +3.8% for both the headline and the core.

The French PMI indices released at 8:15 am BST were expected to tick just slightly higher in both cases. However, the actual reading showed a significant improvement with manufacturing index jumping from 50.6 pts to 52 pts and the service gauge moving from 51.5 pts to 53.1 pts.  However, when it comes to the eurozone it is the German data that is most closely watched by the markets. Luckily for EUR bulls, the German data also came in better-than-expected. Manufacturing index jumped from 44.3 pts to 45.4 pts (expected 44.6 pts) and the services gauge moved from 55.4 pts to 55.6 pts (expected drop to 55.2 pts). While it certainly is an improvement, one needs to remember that the German manufacturing PMI is still deep into the contraction territory. Nevertheless, traders seem to play it down for now and the EURUSD currency pair is testing the 1.1310 handle following the release.

Deutsche Bank (DBK.DE) can be found among the best performing DAX stocks on the final session of the week. It is quite strange given that the latest reports concerning the company are not too positive. Reuters says that the Bank’s executives expect tougher regulatory action in the US over stress tests. Results of the stress tests are not known but it is rumoured that the Deutsche Bank may fail them. Additionally, the Bank is being pressured by the New York Times report. NYT claims that the Bank is facing a US probe over the money laundering activities.

Declines on the oil market pressured stock prices of major oil producers in the second quarter of 2019. Among such companies one can find Total, the French oil and gas company. In this short analysis we will take a look at recent acquisition and project developments as well as the company’s dividend safety.