Markets stable after ugly midweek sell-off

Stock markets turned ugly on Wednesday as ADP added to the doom and gloom of the ISM report and the US prepared tariffs on Europe following the WTO ruling.

Investors have been extremely resilient to negative headlines this summer, driving US stocks back to record territory even as the Fed was cutting interest rates to shield the economy from the imminent recession threats.

The ISM report caught investors off-guard, while the tariffs and ADP data delivered a mean right hook leaving them dazed and vulnerable. With numerous services PMIs being released throughout the day and the jobs report tomorrow, the knockout punch may not be far away, leaving the Fed with little choice but to throw in the towel.

The levies on a variety of European goods from cheese to planes may be fair game from the Trump administration following the WTO ruling but it's safe to say there will be retaliation and the White House may find itself fighting an election and a trade war on two fronts at the same time. Trump does not like to make life easy for himself.

Boris expecting a chilly reception

Boris Johnson will lay out his Brexit proposals to Parliament today as the clock ticks down to the crucial EU summit on 17 October. We should expect a frosty reception for the Prime Minister and his plans as parties across the house prepare for an election in which Brexit will be at the core. Boris is also not exactly Mr Popular in the commons at the moment given his controversial response to requests to rein in the abusive language.

The initial response in Brussels to Johnson's plans has not been as cold as we've seen in the past but there is clearly still a lot of work to do over the next couple of weeks. Many remain skeptical that Johnson really wants a deal, while Johnson himself is adamant that he will not request an extension. Whatever happens, Johnson has certainly achieved one thing that his predecessor did not, he's convinced everyone that he's willing to leave without a deal, something he views as crucial to achieving a deal that removes the backstop.

Gold soars on safe haven appeal

It would appear gold has regained its appeal among investors, with the stock market sell-off over the last couple of days prompting a stampede towards the safe haven's. Gold had only just broken $1,480, a move that had been building for weeks, only for the data to cut the sell-off short.

All hope is not lost though. The rally may have pushed gold back above $1,480 but it's still comfortably in retracement territory which is perfectly normal in these kinds of moves. Of course, if the bad news keeps flowing then gold's appeal will only increase but right now, there's plenty of downside scope for the yellow metal.

Oil testing 2019 lows

Oil prices continued their slide towards their 2019 lows on renewed global growth concerns, as plunging risk appetite dragged crude lower. We've tested these levels on multiple occasions this year in the $55-57 range in Brent and $50-52 in WTI but with the data softening in areas that held up before, they could be threatened this time around. It's been some sell-off though since the Saudi spike, I wonder whether some profit taking may kick in around these levels in the near-term.