Spreadex Market Update
FTSE flourishes under healthy mining stocks whilst VW scandal suffocates DAX once again
That services PMI, coming in at 54.9 against the 54.6 expected, ends 3 months of consecutive declines, and comes hot on the heels of an impressive (if unconvincing) manufacturing PMI on Monday.
Overall it was also a strong morning for the Eurozone’s services PMIs, with better than expected performances from Spain and France, and only marginally lower than forecast figures for Italy and the region as a whole. There was one outlier, however; coming in at 54.5 against the previously stated 55.2 flash estimate, Germany’s services miss compounded a disappointing morning for the country.
The main source of the DAX’s misery, which has left the index struggling to gain any traction, has been Volkswagen. The latest twist in VW’s months-long scandal has seen the company admit it has found carbon dioxide emissions ‘irregularities’ in 800,000 vehicles (so far). And with car vehicle tax rates based on CO2 emissions in countries like the UK and Germany, analysts are now claiming Volkswagen’s newest moment of misconduct could be even more costly than its last.
Looking ahead to the US open and a dense afternoon of data could potentially push the Dow Jones across the 18000 mark for the first time since July. That will be dependent on the strength (i.e. weakness) of today’s figures, including the Markit and ISM services PMIs and the ADP non-farm report. Adding an extra pinch of spice to the afternoon’s proceedings will be Janet Yellen’s testimony in front of the House Financial Services Committee, with investors on the lookout for any comments on monetary policy.
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