The pound is on the rise this morning after a services PMI print that showed the strongest rise in activity in the sector so far in 2017. The FTSE 100 is edging higher and up by just under 10 points at the time of writing.
Economic slowdown fears allayed
Consecutive releases at the start of the week showing below forecast activity in the manufacturing and construction sector had raised the importance of this morning’s services data by a couple notches, with a third disappointment having the potential to cause concern as to the pace of economic activity. Fortunately a reading of 55.0, which was above both the forecast and prior prints, has gone some way to allay any concerns and suggests that the economy continues to progress at a fair rate. A closer look at the release shows the business activity growth hit a three-month high in March and new work increased at a strong pace, although job creation did slow.
Rising inflation to impact BoE?
What could be of particular interest to sterling traders is that last month had the strongest prices charged inflation since September 2008. This could be seen as a sign that concerns surrounding above target inflation are set to return and create an unwanted headache for the BoE in the not too distant future. Despite the recent triggering of Article 50 there is still elevated levels of uncertainty around the future economic landscape and the BoE will not welcome another sign of rising inflation at a time when they would like to have the full range of policy tools at their disposal, should the economy experience any adverse shocks.
Miners rise to lift the FTSE
Antofagasta (LON:ANTO) Holdings, BHP Billiton (LON:BLT) and Anglo American (LON:AAL) are amongst the best performing stocks on London’s blue-chip index this morning as the mining sector is enjoying a bright start. With the oil price rising to its highest level in almost a month, there is some notable buying in oil majors as Royal Dutch Shell (LON:RDSa) and BP (LON:BP) are both gaining and higher by more than 1.5%. Old Mutual is seeing little by the way of any let up in its selling with the stock off once more and down by nearly 2%. Yesterday saw the South African rand attempt to find some firmer footing as president Jacob Zuma addressed his latest cabinet reshuffle in Pretoria on Tuesday, but there has been more selling this morning and Old Mutual is declining in kind. Housebuilders are also in the red with Barratt Developments (LON:BDEV) and Taylor Wimpey (LON:TW) both firmly lower after a quiet start to the week.