Spreadex Market Update
Construction PMI contraction looms for FTSE and pound
Following on from Monday’s manufacturing misery the focus turns to construction this Tuesday, with the latest Markit PMI set to be released later this morning. Analysts are expecting it to drop to a woeful 44.0 from 46.0 last month, which would be the worst reading since the height of the financial crisis back in 2009. Somewhat understandably the FTSE isn’t best pleased about this prospect, opening down by around 0.2% to near a week and a half low.
The pound, on the other hand, is putting on a brave face, trading just above the 1.32 and 1.18 against the dollar and the euro respectively. Despite the near-guarantee of a rate cut sterling has been remarkably lateral in its movements recently; since mid-July it has reliably bounced away from 1.30 against the dollar, tending to hover somewhere between 1.31 and 1.32. However, the strain of the next few days, with this morning’s construction PMI and tomorrow’s services reading all leading to the main event on Thursday, could see it drop out of that trading bracket.
The Eurozone is relatively quiet this Tuesday, lacking the wave of manufacturing data it saw on Monday. Nevertheless they are joining in with the FTSE’s fall, the DAX and CAC slipping between 0.2-0.4%.
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