Spreadex Market Update
UK manufacturing PMI worse than initial Markit glimpse, pound suffers in the aftermath
The effects of this contraction territory figure on the FTSE (which is teetering on the edge of a loss thanks largely to the banking sector) were somewhat mitigated by the fact that it only increases the change of action from the Bank of England on Thursday, the situation now perhaps requiring not only a rate cut but something a bit more substantial. Thanks to this line of thought the pound was the one that suffered following the PMI-reveal, slipping 0.4% against the dollar and 0.3% against the euro.
The Eurozone had similar, if not quite as severe, issues this Monday. Both Spain and Italy underperformed expectations, while France remained in contraction territory for the 5th consecutive month; only Germany beat estimates at 53.8 against the 53.7 forecast, helping the region-wide figure crawl up to 52.0 from the 51.9 forecast. This couldn’t prevent the DAX from seeing its earlier gains being cut by two thirds, though the German index is still the best performer this morning with a 0.4% rise.
Looking ahead to the US open and the focus will remain on the manufacturing sector. The Markit reading is forecast to be confirmed at an improved 52.9 (against 51.3 the month previous), while the ISM figure is set to slip to 53.1 from 53.2. Nothing of this has the Dow Jones too bothered at the moment, the futures suggesting a 35 point rise after the bell.
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