Spreadex Market Update
Oil slide and dollar slump hurt FTSE and boost pound this Tuesday afternoon
The thrust of the afternoon’s momentum seemed to come from 2 sources; the decline from Brent Crude and the dismal state of the ISM services PMI. The former comes less than 24 hours after the black stuff has surged on news of an agreement between Russia and Saudi Arabia to stabilise the oil market, investors apparently less convinced than they were yesterday about the likelihood of this leading to any concrete action. The latter, meanwhile, saw the services sector join US manufacturing in slumping across August, the ISM survey coming in at 51.4 against the 55.4 expected.
With the dollar suffering in light of yet another blow to the hopes of a September rate hike the pound seized an opportunity to climb beyond yesterday’s 7 week high, sterling taking 0.7% off the greenback to hit 1.34. This provided extra drag on the FTSE, which was already dealing with the oil downturn, leaving the UK index nearly 1% lower than it was at the start of the European session.
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