Spreadex Market Update
Data disappoints markets despite silver linings
Bar slight growth by Germany and France, the services PMI data from the Eurozone as a whole was weak, slipping from last month’s figure. However, there was a silver lining to this issue, as the composite PMI calculated by Markit signalled the fastest growth for the Eurozone in 7 months. Yet investors failed to look past the headline figures of a services slump, ignoring the positive comments embedded in the release. Once the Eurozone indices started their declines it appeared nothing could stop them, even as the region-wide retail sales benefited from a German boost, reaching 1.1% for January compared to only 0.3% in December.
The FTSE followed the Eurozone’s lead, seeing its services PMI fall by 0.5 month-on-month, with investors having the same phobic reaction as to the figures from the continent. However, once again this disappointing data contained flashes of positivity, with growth still strong in regards to employment and new business. Yet these comments failed to chime with traders, sinking the UK index further into the mire it wandered into yesterday afternoon.
Matters weren’t helped by the latest wobble in oil; in a speech this morning Saudi oil minister Al-Naimi claimed that OPEC wouldn’t slowdown production, and that the theories of a shale-inspired oil war are false. This led Brent Crude slightly lower, but it still managed to heroically hang onto the $60 per barrel level is has so often returned to of late.
The US futures remained a victim of the hostile trading environment that Europe has been fostering since yesterday morning, with apparently little hope of an upswing in America’s dismal run of data since the New Year. The US markets one hope of a turnaround today will be if the ADP non-farm figure indicates the continuation of the impressive non-farm results the US has seen in the past 3 months. However, given how toxic the markets seem at the moment, even this might not be enough to inspire a change in direction.
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