Spreadex Market Update
Pound suffers as UK inflation remains unchanged at 0.3%
The FTSE remained down by around half a percent as the morning continued, thanks to a underperforming inflation figure (unchanged at 0.3%, just missing the 0.4% analysts were expecting) and a widened public sector net borrowing figure (which rose to a deficit £6.5 billion from last month’s upwards revised £14.4 billion surplus). Yet whilst the UK index took a tumble the pound was the main victim of the morning’s weak data, sterling plunging 0.8% against the dollar as investors hopes of a strong inflation figure were swiftly nipped in the bud. There had been talk that the forecast 0.4% (which would have been a 14 month high) would have put pressure on the Bank of England to raise rates sooner than expected; now, however, it looks like the central bank will be stuck in its dovish dilemma for a bit longer.
A mixed morning for German data, with the flash manufacturing PMI, perilously close to contraction at 50.4, countered by a steady services figure (at 55.5), an improved German Ifo business climate number (at 106.7 against 105.7 last month) and a better, if not quite as high as forecast, ZEW economic sentiment saw the DAX struggle to direction this Tuesday, falling by 0.1%. The CAC, meanwhile, understandably saw wider losses in light of the attacks in Brussels, slipping by over 1%.
The Dow Jones looks set to join Europe in the red when it opens later today, the futures pointing to a 0.2% drop when the bell rings on Wall Street. The US throws its own mini-hat into the data ring this afternoon with its flash manufacturing PMI, expected to rise to 51.6 from last month’s ominously low 51.0.
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