UK and European stocks fell on Wednesday, matching losses seen in Asia despite the better than expected service sector data from China. Stock market declines were cushioned by a 2.5% gain in the price of oil but the overall weakness across commodities remains a major point of concern across markets.
The UK service sector unexpectedly expanded quicker than expected in January according to PMI data. The British pound rose since the positive data for the largest part of the UK economy indicates a slightly faster pace of economic growth in the first quarter. The service sector rise flies in the face of concerns that the threat of Britain’s exit from Europe is hurting business. Looking ahead the outlook is slightly less rosy as falling order books mean potentially less hiring in the next 12 months.
The euro fell slightly after data showed the German service sector expanded at a slower pace in January while France’s service sector expanded again after contracting in the wake of the Paris terrorist attack.
Financials led the decline on the FTSE 100 with Hargreaves Lansdown (L:HRGV), Standard Chartered (L:STAN) and Barclays (L:BARC) amongst the top fallers as major central banks steer away from higher interest rates which could have served to boost bank lending margins.
US markets look set for a higher and less volatile open on Wednesday with merger news offering a source of optimism after the agreed deal between Syngenta (N:SYT) and ChemChina and Yahoo! (O:YHOO) hinting at a possible sale.
USA pre-opening levels
S&P 500: 2 points higher at 1,905
Dow Jones: 15 points higher at 16,168
Nasdaq 100: 2 points higher at 4,190
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