Gold recovers after a “flash crash”

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gHello. The FTSE 100 is expected to open lower today, losing around 0.37 pc after posting its best weekly gain since June last week. Asian stocks surged higher overnight, but suffered from a sharp drop in gold and oil prices and weak Chinese trade data. Meanwhile, Europe is expected to get out of control when trading begins this morning as traders brace for the slowdown in German trade figures.

Investors appear to fear that the slowdown in Chinese trade, possibly followed by a slowdown in Germany, shows that the delta variant epidemic is interrupting the global recovery.

“While we have seen some return of optimism in the US labor market and the US economy, concerns are growing over the Chinese economy which has shown worrying signs of weakness in recent weeks, amid reports of growing outbreaks of delta variant cases that have reportedly caused lockdowns in various parts of the country, ”said Michael Hewson, CMC Markets.

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What happened during the night

Asian stocks faltered on Monday amid steep losses in gold and oil prices, as the dollar hit four-month highs against the euro after an optimistic US jobs report pushed up bond yields.

Sentiment was shaken by a sudden drop in gold as a breakout of $ 1,750 triggered stop loss sales to bring it down to $ 1,684 an ounce. It was last down 1.4 pc at $ 1,738.

Brent also fell 2%, fearing the spread of the delta variant would dampen travel demand.

The holidays in Tokyo and Singapore created difficult trading conditions, leaving the MSCI’s largest Asia-Pacific stock index outside of Japan down 0.5 pc.

Japan’s Nikkei was closed but futures were trading 100 points below Friday’s close. Nasdaq futures slipped 0.4% and S&P 500 futures slipped 0.3%.

Chinese trade data released over the weekend beat expectations, while figures released on Monday showed inflation had slowed to 1% in July, offering no obstacle to further stimulus.

The Chinese blue chip index was a bit firmer.

Coming today

  • Company : Hargreaves Lansdown (full year); Clarkson, TI Fluid Systems, PageGroup, H&T Group (interim)

  • Economy: BRC retail sales (UK), trade balance (Germany), consumer price index (China)

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