Spreadex Market Update
Solid services PMIs boost Eurozone, disappoint FTSE; US prepares for ADP non-farm figures
That UK services PMI miss brings the figure to a 16 month low; more importantly, combined with the performance of the manufacturing and construction PMIs, it points to second quarter GDP of 0.6%, not the preliminary 0.7% reported last week. This meant that, whilst the UK index crept into the green, it couldn’t really muster a significant surge past the 6700 mark, despite a strong showing from Rio Tinto (which reports its half year results tomorrow) helping to lift much of the mining sector. The pound, on the other hand, was a bit more excitable, hitting a 2 week high against the euro ahead of the Bank of England’s ‘Super Thursday’.
Whilst the FTSE was slightly let down by its morning data, the Eurozone’s services PMIs provided a solid, if unspectacular, set of figures, much like Monday’s manufacturing numbers. However, despite a slight slip in the region-wide PMI, it was only marginally lower than June’s 4 year high, meaning investors ignored a big miss in Eurozone retail sales to push the DAX and CAC up by over a percent.
US investors weren’t really willing to bite the bullet and lead the futures either up or down this morning, seemingly waiting until after this afternoon’s key figures to wake up the Dow Jones et al. The trade balance and ISM non-manufacturing PMI numbers will, of course, be of interest to both the rate-hike fearing US indices and the lift-off hungry dollar; the main focus, however, will be on the ADP non-farm (and non-government) employment change figure. Analysts are expecting 216k, a drop off from the 6-month ADP high of 237k, but still importantly above 200k. If forecasts are correct this won’t be the kind of number that means the Fed has no choice but to raise rates in September, but would add to Filofax of figures the hawks can point to push for a lift-off next month.
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