Despite some sharp falls this morning the US S&P 500 was trading -0.25% earlier mid-afternoon London time following a -1% fall earlier. The Nasdaq fared better, up +0.23%. However Europe and London ignored the slowing attrition rate across the Atlantic: at 3.30pm this afternoon the FTSE 100 was down -1% despite a fall in sterling for the export-heavy index while the French CAC 40 was more than -1.10% lower.
At the moment the corrections appear to be closer to profit-taking rather than out-and-out worry on fundamentals. A major US service sector indicator, The Institute of Supply Management’s non-manufacturing purchasing manager's index (PMI), climbed strongly this morning, from 56.5 in December to 59 (any reading above 50 indicates growth) in January.
Some of that uptick may be supported by the Trump tax code changes. The numbers aren’t hugely significant but are a reminder that the US economy remains on high-burn.
But PMI data, this time from the UK, was much less cheery. Analytics for the British services sector – the UK’s economy is 80% service-sector based – slipped to 53 in January from 54.2 in December. A figure of 54.1 had been predicted beforehand – a substantial demotion.
Sterling responded; just after 4pm the pound was down -0.64% at 1.4018 and down -0.43% against the euro at 1.1287. That’s the worst figure for sterling against the EU-area currency for two weeks. Tonight the FTSE 100 finished -1.46% lower with WPP down almost -10% at 1165.76p a share. The FTSE 250 was down -1.36%.
- UK FTSE 100 7,334.98 -1.46%
- DAX 12,716.15 -0.54%
- CAC 40 5,304.03 -1.14%
- Euro Stoxx 600 383.06 -1.29%
- Dow 25,435.11 -0.33%
- S&P 500 2,758.05 -0.14%
- Nasdaq 7,257.87 +0.23%
- Nikkei 225 22,682.08 -2.55%
- Gold 1,337.60 +0.02%
- Oil WTI 64.84 -0.95%
Barnier to UK: make a choice
More pressure on PM Theresa May. EU chief Brexit negotiator Michel Barnier has told the British government it is time “to make a choice”. Speaking after Downing Street talks today Barnier said “that without a customs union and outside the single market, barriers to trade in goods and services are unavoidable”.
Downing Street remains adamant Britain will quit the EU customs union post-Brexit. Inside the customs union the UK has the right to tariff-free trade. Outside it does not but has the chance to create trade deals elsewhere. Barnier says the EU will not finalise more talk guidelines until the EU summit in March. Which should give the UK time to “clarify its position” he says.