Chinese stocks saw a big correction overnight, with the Shanghai composite shedding 6.5%. Chinese markets are SO overheated though, that the Shanghai is still (barely) in positive territory for the week. Wall St opened lower.
The dollar is near unchanged this morning, recovering from losses overnight when the euro jumped on fake news of a Greek debt deal being close. Precious metals are modestly lower this morning.
Yesterday in the Markets
Stocks recovered some of their recent losses Wednesday, with the Nasdaq the only index completely recovering and hitting a new closing high. The dollar ended near unchanged after a morning rally reversed and slowly leaked downward through the day. Oil ended lower, with Brent crude dropping over 2%. WTI lost less than 1%, with prices supported by monster wildfires in Canada forcing several oil sands wells in Alberta to be evacuated. The out of control fires are growing, and well closures have reduced Canada’s oil production by 10%.
Spot gold and palladium both closed basically flat yesterday, with silver and platinum losing around a half-percent.
Factors Affecting Gold Today
The Chinese stock market, which has been on “frenzy” mode this month, saw a correction overnight that shed 6.5% from the Shanghai composite index, the worst one-day drop in four months. There is an estimated $300 billion in margin trading in Chinese markets, setting them up for their own “1929” style correction.
It was another day of announcements out of Athens that a Greek debt deal was imminent, and another day of denials by the rest of Europe. The fake deal news today saw the euro gain strength, sending the U.S. dollar lower, but things reversed once the truth was out. Rumors are swirling that Greek PM Tsipras was urged to lie about deal progress to stop a run on the banks. Nearly €300 million were pulled out of Greek banks in one day by depositors on Tuesday.
Brent crude fell to a one-month low yesterday, and is lower again today, as Iraq is set to increase production by 800,000 barrels a day next month.
Tomorrow is “GDP Day,” with reports coming in from Italy, India, the U.S., and Canada. Retail sales in Germany, consumer goods sales in France, and consumer sentiment in the U.S. are also on tap, as well as the Chicago PMI, which will give a snapshot of business conditions in the Midwest.