Spreadex Market Update
Reminder of Chinese slowdown spooks European markets ahead of services splurge
Kicking off the day’s data dump with a whimper was China, Caixin reporting that the country’s economy is ‘weak and unstable’ as the latest PMI slipped to 51.2. Of course this won’t have helped the markets regain the confidence that was so rampant on the first day of the month, a reminder of the Chinese slowdown the last thing anyone needs to hear when they wake up for a day’s trading.
Starting the session down around 20 points the FTSE failed to muster much energy after the bell, despite a largely green, if gradually weakening, commodity sector as Brent Crude just about holds its head above $36.50 per barrel. In terms of its own services PMI, the UK is looking at a fall from 55.6 to 55.1 month-on-month, the figure the worst since those announced for October and unlikely to change the morning’s mood if accurate.
The Eurozone indices were similarly grouchy this Thursday, the DAX and CAC slipping 35 and 15 points respectively. Already it appears that Spain has set the services tone for the morning, the country’s PMI slipping from 54.6 to (an admittedly better than forecast) 54.1. Italy is expected to see a sharper drop, from 53.6 to 52.7, whilst France is set to remain in contraction territory at 49.8 with Germany at a slightly more healthy 55.1. All in all analysts are expected that to leave the region-wise figure at a 14 month low of 53.0, adding to the already long list of reasons why Mario Draghi will be expected to bust out some kind of extra stimulus when the ECB meet this time next week.
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