The European session got progressively uglier as Wednesday went on, with fears of contagion from the troubled emerging markets, the prospect of Trump upping the ante re. the US-China trade war later in the week, and an ominous UK services PMI shaking investors’ confidence.
Shedding half a percent, the FTSE fell below 7420, slipping to a fresh 4 and a bit month low in the process. The UK index was likely saved from the kind of losses seen in the Eurozone – the DAX fell below 12150 after dropping 75 points, while the CAC shed more than 1% to sink under 5300 – thanks to the pound’s own decline
Though August’s services data was better than forecast, rising from 53.5 to 54.3, it was couched in negativity, with Markit’s Chris Williamson pointing to a ‘darkening business mood’ in the UK. This sent sterling down 0.4% against both the dollar, with cable tumbling to a sub-$1.281 fortnightly low, and the euro, forcing the pound back under €1.11.
And it doesn’t look like things are going to improve this afternoon. The Dow Jones is sent to drop 100 points when the bell rings on Wall Street, a move that would send the US index back towards 25850.
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