A rebounding manufacturing PMI couldn’t do much for the FTSE, which spent Wednesday morning with a retail sector headache.
October’s PMI came in at 56.3 against the 55.8 forecast and the (revised) 56.0 seen in September. And though this didn’t cause anything resembling a sterling surge, it did allow the currency to maintain its early gains; cable is now holding above $1.33 – just –while against the euro sterling is up 0.2%, flirting with levels not seen since mid-July.
It could be argued that this manufacturing beat gives the Bank of England hawks a bit more ammo heading into Thursday’s rate vote. However, the situation over at Next (LON:NXT) – which fell 8% following its not bad (total sales up 1.3%) but still sort of awful (retail sales down an eye-watering 7.7%) Q3 results – provides an alternate view, with the high street staple’s problems succinctly capturing the consumer spending concerns that may put some MPC members off hiking rates.
Next’s sharp decline infected rivals Marks and Spencer (LON:MKS) and Primark-owner Associated British Foods (LON:ABF), with those similarly positioned firms falling 5.2% and 1.7% respectively. This, alongside sterling gains, helped subdue the FTSE, which sat effectively flat just above 7500 despite a verdant commodity sector.
In contrast the eurozone indices were in a very good mood. The DAX, which is playing Q3 GDP reaction catch-up after yesterday’s bank holiday, rocketed 160 points higher, crossing 13450 for the first time in its history. Elsewhere the CAC jumped past 5500 with a 0.5% rise, while the IBEX climbed 0.2%.
Looking to this afternoon and the US has its own manufacturing PMIs to process. The Markit reading is forecast to jump from 53.1 to 54.5 month-on-month, while the ISM figure is forecast to slip from 60.8 to a still respectable 59.5. There’s also the ADP non-farm employment change data, expected to bounce from 135k in September to 202k in October. Of course, all this is just a precursor to the evening’s Fed statement, in which investors will be looking for comments that green-light a December hike.
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