BRICS summit helps lift Gold once again

• SAP earnings help lift DAX in otherwise downbeat start to trade.

• BRICS summit helps lift Gold once again.

• UK debt surge highlights difficult task faced by the chancellor.

A mixed start in Europe follows on from similarly unconvincing sessions in both the US and Asia. As we stand just two-weeks out from the US election, the rising US treasury yields and dollar highlight why we are starting to see a degree of caution come into play. In Europe, it is the DAX which leads the way, gaining ground despite the losses seen for the FTSE 100, CAC and Ibex in early trade. Nonetheless, that outperformance for the DAX comes primarily from a single stock, with a 5% post-earnings surge for software giant SAP (12% of the DAX) serving to lift the index.

Today sees the BRICS summit get underway, with the fresh push higher for gold serving to highlight the ongoing theme around de-dollarisation. The stockpiling seen throughout the BRICS group highlights one of the main reasons why we continue to see the precious metals space outperform, with claims of a gold backed BRICS currency bringing plenty of speculation over why the metal will be increasingly in demand going forward.

In the UK, soaring public sector net borrowing data highlights the ongoing battle faced by the new Labour government, with today’s figure showing the third highest September government borrowing figure on record. This serves to further highlight the battle faced by the chancellor, as the UK braces for a budget that could ruffle plenty of feathers. Today’s appearance from the BoE Governor Bailey provides a fresh opportunity to gain greater clarity over the path for UK rates in the months ahead, with last week’s CPI slump helping to lift expectations of another 50bp of easing this year.