Spreadex Market Update
US manufacturing contracts ahead of all-important non-farm report on Friday
While the Markit PMI was only a smidge below expectations at 52.0 against the 52.1 suggested earlier in the July, the ISM reading was a bit of a shock, arriving firmly in contraction territory at 49.4 against the 52.0 forecast and the 52.6 seen last month. That’s the worst figure in more than half a year, and potentially damages the case of those in the Fed looking for a rate rise in September.
Tomorrow, however, is August’s non-farm payrolls reading, a figure that will carry far more clout with the central bank’s members than the manufacturing survey. The proximity, and importance, of that jobs report perhaps explains why the Dow Jones took the PMI news as a firm negative rather than a hike-delaying positive, the index falling 0.1% after the bell.
Turning back to Europe and after a strong start to the day the FTSE has undergone a complete reversal this Thursday, plunging in the red by half a percent and abandoning its 6800 level in the process. The index is being squeezed on 2 fronts this afternoon. Firstly the pound’s post-PMI push, which has extended to 1.4% and 1.3% against the dollar and the euro respectively, has sapped most of the FTSE’s positive energy. Secondly its oil stocks are suffering, BP and Shell down 1.7% apiece thanks to the near 1.5% drop seen by Brent Crude.
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