FTSE 100 nudges lower amid US economic jitters and second wave worries; gold hits record high as punters rush for cover

The FTSE 100 started in negative territory as fears over America’s economic fate and growing worries over a coronavirus second wave in Europe hit sentiment. Those jitters were more vividly expressed by the headlong rush into gold, a haven asset in times of turmoil. The price of the yellow metal hit an all-time high of US$1,958.40, up US$33.20, and is now only a couple of sessions away from breaking the US$2,000, based on its current trajectory. A further sign of malaise could be found in the dollar, which has been trading at basement levels last seen in 2018. Friday’s jobless number, which unexpectedly rose for the first time since March, led to a nervy assessment of the outlook, not helped by Spain’s upsurge in Covid cases. Perhaps a tonic may come in the form of another round of American fiscal stimulus, which so far has only been hinted at. In the meantime, fear will continue to prevail, although the equity markets appear insulated against the latest upsurge in nerves by the volume of cheap money sloshing around the system, analysts said. On the market, the session started positively for the Footsie’s precious metals groups – Polymetal (LON:POLY), up 4.5%, and Fresnillo (LON:FRES), ahead 3.5%. The broader mining sector was also in demand, led by Antofagasta (LON:ANTO), 2.4% higher, and Glencore (LON:GLEN), which edged 1.2% higher. Follow-through buying after last week’s stellar trading figures saw B&Q owner Kingfisher (LON:KGF) advance 1.7%. The travel stocks were hard hit by the upsurge in coronavirus cases in Spain, which has forced the Foreign Office to pull up the air bridge with the country and sparked fears that Europe may be headed for a second wave. British Airways owner IAG (LON:IAG), which on Friday said it was mulling a cash call, was down 8.7% early on, with aero engineers Rolls Royce (LON:RR.) and Melrose Industries (LON:MLRO) descending in its vapour trails with losses of 3.5% and 3.8% respectively. 6.50am: Modest gain for Footsie Gold hit a record high and the dollar slumped to a low against a basket of currencies amid worries over the deteriorating economic outlook for the world’s largest economy. At 6.20am, the yellow metal was changing hands for US$1,956.20, up US$31 in a fairly busy opening session in Asia on Monday. On the current trajectory, the price should quickly pierce the US$2,000 mark predicted by Citi earlier this month. Gold, a go-to in times of uncertainty, continued to react to US jobless claims, which rose unexpectedly and for the first time since March, while the American currency dropped to levels not seen for two years. Striking an upbeat note amid a chorus of worries, CMC Markets analyst David Madden pointed to the experience of Europe in recent weeks as it has tackled the worst the coronavirus pandemic. “One thing we did learn last week was that the rebound in economic activity in France, Germany and the UK has continued apace through June and July, with improvements in both manufacturing and services sector activity, which offers hope that these economies could well outperform the US economy, in the weeks and months ahead, second virus spikes notwithstanding,” he pointed out. However, he dampened the mood a little by acknowledging that eyes are all now trained firmly on Spain, where worries are growing over a potential second wave. Against this backdrop, the FTSE 100 looks set for a benign start to the trading week with traders calling the UK blue-chip index to open 6 points higher at 6,129.89 having dropped 87 points on Friday. Looking ahead, seven of the UK’s 10 biggest blue-chip companies report in the coming week, plus four of the five big banks and, across the Atlantic, tech titans including Apple and Alphabet will provide quarterly updates. The Footsie giants spread across the global pharma, commodities and consumer goods industries, so their updates are is likely to provide a crucial litmus test for the health of the global economy and the direction for equity markets for the coming weeks. And with Wall Street watchers worrying about a bubble as earnings season rolls round to include two of the world’s largest companies and a Federal Reserve policy statement, it’s undoubtedly a compelling week for finance fans. Around the markets Pound worth US$1.2833 (+0.3%) Gold US$1,956.20, up US$31 an ounce Brent crude flat at US$43.34 a barrel 6.45am: Early Markets - Asia/Australia Asian markets mostly traded higher today with Taiwan leading the gains among the region’s major markets with the Taiex surging 2.42%. South Korea’s Kospi also saw robust gains of 1.04% and in China the Shanghai composite was marginally higher after the country’s industrial profits for June soared 11.5% year-on-year. In Australia, the S&P/ASX 200 was up 0.20% helped by a rally in gold mining stocks following the price of the precious metal reaching an all-time high of US$1943.93 per ounce. READ OUR ASX REPORT FOR MORE INFORMATION Proactive Australia news: Cardiex Ltd (ASX:CDX) has completed a $2.5 million placement at 3 cents per share, resulting in the issue of around 83 million new shares and 16.6 million new listed options. Oklo Resources Ltd (ASX:OKU) has received firm commitments from sophisticated and institutional investors to subscribe for a placement of 31.25 million shares to raise $10 million. MGC Pharmaceuticals Ltd (ASX:MXC) is encouraged by results from a safety and toxicity study completed on mice for AtemiC, showing no clinical signs or adverse reactions from the full panel of hematology and chemistry blood tests. Great Western Exploration Limited (ASX:GTE) has consolidated 60 kilometres of strike within its highly prospective Golden Corridor Project in WA and is planning an exploration program to include drilling. Pure Minerals Ltd (ASX:PM1) (FRA:4EA) subsidiary Queensland Pacific Metals Pty Ltd (QPM) has entered an MOU with Sun Metals Corporation Pty Ltd to investigate the potential to produce a joint iron oxide product in Townsville, Queensland. Cardinal Resources Ltd’s (ASX:CDV) (TSE:CDV) (OTCMKTS:CRDNF) board of directors has unanimously recommended that shareholders accept the revised A$0.70 off-market takeover offer from Shandong Gold Mining (Hong Kong) Co Limited. Wiluna Mining Corporation Ltd (ASX:WMX) has received more high-grade gold results from resource development and infill drilling at the Wiluna, Regent and Lake Way mining centres of its Wiluna Mining Operation in Western Australia. Galileo Mining Ltd (ASX:GAL) has started reverse circulation (RC) drilling highly prospective nickel targets at Lantern Nickel Project within the Fraser Range nickel belt in Western Australia.