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European PMI data to provide direction this morning


The FTSE has opened positively this morning, if a little muted, up 20 points in early trading. Given the escalating tensions in the Korean Peninsular, the financial markets do not appear to be adversely affected.

CMC Markets analyst Michael Hewson noted: “Flare-ups on the Korean peninsula are fast becoming a weekly occurrence and while financial markets remain nervous about the potential for the next dangerous conflagration, each escalation on the part of North Korea seems to elicit a milder market reaction than the previous one.”

The FTSE and Sterling have a notable distraction this morning, which comes in the form of the latest Services PMI release.

Spreadex Analyst, Connor Campbell commented “So far August’s PMIs have been a bit of mixed bag; last Friday’s manufacturing reading was far better than expected, only for yesterday’s construction figure to fall to a one year low. The services PMI is the most important of the three…analysts are expecting it to slip from 53.8 to 53.5 month-on-month”

ADS Securities Analyst, Konstantinos Anthis added, “The pound has been resilient over the last few weeks especially against the dollar, but its strength will be put to the test today if the Services PMI report prints lower.”

“However, we believe there is room for a surprise to the upside today following the stronger Manufacturing figures we saw last week and should this be the case then the UK currency will be able to remain above the 1.2900 area.”

Over in the Eurozone the situation was broadly similar. The CAC was up 0.1% in early trading, while the DAX enjoyed a more positive 0.3% increase.

The Euro will be in the spotlight too, with the release of the Eurozone Retail Sales and UK Services PMI figures this morning. Konstantinos Anthis commented “The euro has been treading water around the 1.1900 area for the past few days, lacking a catalyst to drive prices either up or down.”

“Unfortunately for the single currency analysts are expecting softer figures this month and the surge in the currency’s price might be one of the reasons why consumer are not spending.”

“Should the report print lower in line with expectations the Euro could come under fresh pressure as ECB policymakers might have yet another reason to delay tapering until later this year.”

Following yesterday’s Labor Day holiday over in the US, normal trading will resume later today. With the ongoing geopolitical tensions in Korea, the US markets may well provide the major European indexes with further direction at the open.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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