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European markets down on FOMC, Chinese controls and EMU PMI

The German DAX 30 (-1.88%), the French CAC 40 (-1.75%), the Italian FTSE MIB (-2.83%) and the Spanish IBEX 35 (-1.65%) fall in reaction to still weakening PMI data in the Eurozone (despite rising consensus), as well as to a lack of consensus on extending US QE by key FOMC members, and the introduction of Chinese property price controls. All European equity indexes are down on this “red” Thursday.

EMU Markit PMI Composite eased from 48.6 to 47.3, against a rising consensus of 49.9. Markit manufacturing also disappointed by dropping from 47.9 to 47.8 (consensus of 48.5) and services PMI fell from 48.6 to 47.3 (consensus of 49.0). As expected, France figures underperformed Germany's and Germany got its manufacturing PMI above the 50.0 line, turning expansionary again. Just not as high as expected (50.1 vs 50.5 consensus).

10-year Letras improved their average yield from 5.290% to 5.202%. 2-year debt also lowered its costs, from 2.823% to 2.540%. Portugal will be publishing its current account balance at 12:00 GMT.

The British FTSE 100 is also down, by -1.53%. The London session saw the UK government selling 10-year gilts at rising average yields, from 1.9% to 2.15%. UK CBI industrial trends survey (orders) improved from -20 to -14 in February, beating consensus of -15.

Futures for the American S&P 500, Nasdaq 100 and Dow Jones 30 are signaling a lower opening between -0.25% and -0.40% ahead of the NY session, with US CPI, jobless claims, Markit manufacturing PMI, housing data, and Philadelphia Fed manufacturing survey due to be released.

Forex Flash: UK PSNB reveals budget troubles, CBI orders give no signs of turn-around – TD Securities

The January Public Sector Net Borrowing data still shows the overall picture of a government that is falling behind in its fiscal plans. “The government reported a surplus of £11.4bn, which is better than both last year’s Jan reading of £6.4bn and the consensus forecast of £8.7bn, although it was boosted by £3.8bn from the BoE’s transfer of APF profits”, wrote analyst Marcin Budkiewicz. “But with yesterday’s 4G auction raising about £1bn less than expected and a lack of economic growth leading to persistent downside surprises for government finances, the government is going to have a challenge in putting together the annual Budget for 20 March”, Budkiewicz added. CBI orders improved from -20 to -14, but details came in mixed: export orders rose from -29 to -20, but expectations slipping from +8 to +5. “So no signs yet of a substantial turn-around in UK manufacturing based on the CBI survey”, concluded the TD Securities analyst.
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Portugal: Current Account deficit narrows to €-2.557B in December

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