Spreadex Market Update
Wave of weak European services data ignored as indices post big gains
Just like its manufacturing situation, the European services sector appears to be faltering. The Eurozone’s region wide figure fell to a 4 month low, inspired by a 2 month low for Germany, a 6 month low for Italy and a 9 month low for Spain; only France managed to post an improvement, with its 3 month high an anomaly. Similarly, the UK services PMI growth fell to a whopping 2 and a half year low, at 53.3 against the 56.4 expected, something that, alongside last week’s manufacturing miss, points to a limp 0.3% third quarter GDP.
Yet, as mentioned, none of this fazed investors; the FTSE and DAX jumped 130 and 230 points respectively, with the CAC, the only index with any actual good news, the best performer percentage wise, growing by 3.2%.
This afternoon then brings the USA’s final services and ISM non-manufacturing PMIs, the former expected to see a mild increase whilst the latter, more important, figure is forecast to fall from 59.0 to 58.0 month-on-month. Though the markets did eventually fall in the face of last Thursday’s weak manufacturing PMIs, it wasn’t until the US figure was revealed that the decline actually set in, something that could happen again if America joins the rest of the world with its own disappointing services data. That perhaps explains why the Dow futures are only up 100 points; a respectable increase, but nothing on the muscular growth seen by Europe this morning.
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