Gold is up over $15 an ounce at 10am, as the ISM manufacturing index for the U.S. posts a huge miss of 51.3, compared to an expected 56. Gold was taking the Chinese holiday in stride overnight, as it put the first weekly loss in a month and a half behind it. Emerging market worries provided strength overnight between bouts of profit-taking, and gold was solidly higher on the New York open. Silver is following in gold’s footsteps after moving back to being treated as a precious metal instead of an industrial one. Platinum is booming, after a second trade union joined the platinum mining strike called by Amcu, and Amcu declared it was prepared to strike for at least a month. Palladium got a huge boost in late European trading, making up for recent weakness.
The dollar is slightly weaker, as the euro tries to recover from recent 10-week lows. The greenback is also weaker against the yen, but steady against the yuan. Emerging market currencies are trying to stabilize, with the exception of the Russian rouble and Hungarian forint, which is carving new lows into the daily chart. Oil is suffering on fears of emerging market and Chinese slowdowns.
Wall St. opened up but immediately dropped into the red this morning, the first trading day since the S&P 500 posted its worst January since 2010. U.S. automakers GM posted a 12% drop in sales, 5 times worse than the expected 2.5%; and Ford posted sales 7.5% worse. Fiat-Chrysler bucked the trend thanks to new trucks – sales gained 8%. The downward spiral accelerated as the ISM purchasing managers index in the U.S. came in far below expectations – 51.3% compared to an expected 56%. This has sent the market plummeting to session lows. Canada’s PMI wasn’t much better, posting a nine-month low of 51.7 compared to December’s 53.5.
The slowdown in Chinese manufacturing is weighing on global markets almost as much as emerging market meltdowns. The Chinese manufacturing PMI dropped to a six-month low of 50.5, compared to 51.0 in December. The EU composite PMI, however, came in at the best level in over two years, at a 54.0. This is a healthy rise from 52.7 in December. Even Greek manufacturing PMI managed a gain, its first since August 2009.
But speaking of Greece, rumors of another EU taxpayer bailout of the beleaguered nation has euro stocks in the red.
In Asia, the Nikkei continues to drop, due to exposure to emerging markets and China’s slowdown. This is also pressuring Hong Kong stocks. China’s markets are closed for the Lunar New Year.