Market wrap: market struggled to maintain a positive tone on US/China trade hopes - ANZ

Analysts at ANZ Bank New Zealand Limited, (ANZ), explained that the market struggled to maintain a positive tone on reports that the US reached out to China to resume trade talks. 

Key Quotes:

"US shares erased intraday gains of 0.7%, with key indices down around 0.1% at the time of writing. European equities closed up 0.5-0.9% across major bourses. However, most currency gains against USD have been maintained."

"USD fell against all in the G10 with NOK and AUD leading gains. NOK rose on the continued climb in oil prices while AUD spiked on positive trade headlines. USD/CNH fell from 6.87 to 6.83."

"GBP rose on news that the EU is redrafting language on the Irish “backstop” to appease the UK. US Treasury yields were down 0-2bps across the curve with global yield moves minimal. Oil continued to rise with Hurricane Florence approaching. Gold rose above $1200/oz on the weaker USD."

DATA/EVENT PULSE

LOSING STEAM?US PPI inflation dipped in August, indicating a moderate pipeline of inflation pressures. Headline was 2.8% y/y (mkt: 3.2%, last: 3.3%) and core was 2.3% y/y (mkt: 2.7%, last: 2.7%). Food prices fell 0.6% in the month, while the volatile trade services component dropped 0.9%.

WEAK START TO Q3: Euro area industrial production fell 0.8% m/m in July (mkt: -0.4%) to be down 0.1% y/y. Weak intermediate and consumer goods offset higher energy and capital production."