Spreadex Market Update
UK inflation falls to zero, sharp decline in Eurozone economic sentiment, wave of US data to come
As expected UK inflation fell back to zero for the 4 month this year, with the finger pointed at falling oil, food and clothing prices. Whilst it was no surprise, the news didn’t seem to improve the mood of investors, with the FTSE quickly becoming the worst performing European index of the day as it dropped by nearly 50 points. It also failed to provide any clarity as to what the Bank of England should do in regards to interest rates; the British Chambers of Commerce called for rates to remain unchanged, whilst the Institute of Directors urged the central bank to initiate lift off.
The Eurozone indices didn’t fare much better, receiving their own dose of disappointing data without any sugar to help the news go down easily. The German ZEW economic sentiment figure came in at 12.1 against the 18.3; a big miss, and even more damning considering that number is less than half of the 25 posted last month. The region-wide figure, meanwhile, fell to 33.3 against 42.1 expected, and 47.6 last month. And whilst these figures reflect the chaotic nature of August, that fact didn’t soothe investors, causing the DAX and CAC to both fall by over half a percent.
The day’s data doesn’t slow down this afternoon, with a wave of US figures that will not doubt provide little clarity as to what the Fed will do on Thursday. Retail sales growth is expected to have halved, whilst industrial production is expected to turn negative and the capacity utilization rate is forecast to fall. The Empire State Manufacturing index, however, is expected to improve, though that isn’t saying much considering it hit a 6 (and a bit) year low last month.
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