UK FTSE 100 is cheerful today as data shows service sector returned to growth
Purchasing Managers’ Index – PMI – for January came in at of 52.4, ( a sixteen month high) and up from December’s figure of 49.3. A figure of 50 or above indicates expansion.
The FTSE 100 climbed to touch 7643 in early morning trade.
EU – Eurozone manufacturing and services output remained stable
The latest PMI surveys for the Eurozone show that manufacturing and services output growth remained stable in January. Purchasing Managers’ Index remained unchanged at 50.9.
The Dax was up at: 13580 in early morning trade.
Other market news
The Coronavirus outbreak impacts global stocks
From a market perspective only…
The coronavirus, which is reported to have killed at least 26 people and closed three cities affecting some 30 million people, and this at the start of their New Year celebrations! The mass movement of people for the holidays is making the crisis far harder to contains. Closing cities will affect stocks as it mean less business.
Exposure
Shares with heavy exposure to China or travel businesses, such as airlines, will likely be hit the hardest. The Chinese stock market had its worst day in eight months yesterday when it fell 3%.
Investors are worried about demand from consumers in China. But if this becomes an epidemic, that will be the least of their worries.
Rolls Royce go nuclear
A report released today suggests that Rolls Royce plan to build and install ‘mini’ nuclear reactors in the UK in the next ten years.
The small modular reactors are essentially mini nuclear power stations that can be built in factories and will take up just over 5% of the space used by a conventional power station.
Tesco is ditching plastic wrap
A report suggest that the supermarket intends to dispose of plastic wrap on tinned food.
This is interesting – cashless backlash in U.S.
New York lawmakers voted to ban cashless business – they voted in favour of a bill that forces shops and restaurants to accept cash for payment. Cash is King!
Is the Bank of England more or less likely to cut interest rates after PMI data update?
UK service and manufacturing PMI data released today indicates that the economy improved at a quarterly rate of 0.2% in January.
If business activity is picking up, the Bank of England (BoE) might choose not to cut interest rates. Or, on the other hand, it may encourage an interest rate cut to further enhance business sentiment. My view, leave well alone – money is far too cheap and we do not need more cheap money (go look at the debt pile). And, we do not have any inflationary concerns to speak of.
No more ‘easy’ debt please
We do not need to encourage more debt. If the UK is to bounce back from three years of negative Brexit shenanigans – we do not need a bigger burden of debt. The shackles are now off!
Scheduled data releases due today
Canada – retail sales data due at: 13:30 GMT.
U.S. – manufacturing and service PMI data due at: 14:45 GMT
Oil demand drops on coronavirus fears
Oil prices have fallen as concerns the coronavirus could spread, curbing travel and demand for oil.
U.S. PMI data
U.S. – manufacturing PMI readings came in at 3 month low in January but services PMI strengthened to its highest level since last March. PMI fell to 51.7 in January from 52.4 in the previous month. Services PMI reading climbed to 53.2 from 52.8 in December.
U.S. markets turn negative
In later trading – U.S. markets reverse small gains as anxiety and fear of the virus outbreak in China spread. The World Health Organisation has not declared this as an epidemic. The media seem happy to deliver a daily diet of deaths in a counting excercise further spreading anxiety. I wonder if the deathtoll for influenza is higher around the world?
Investors are creating their own anxiety as fear grips and market sectors fall into focus, such as ravel and transport.
Markets close…
Dow closed down 170 points after falling around 300 points at one point . Dow ended the day at: 28990
S&P 500 closed down at: 3295
Nasdaq closed down at: 9315
FTSE 100 (7586) and Dax (13577) both closed up. But this was before a second case of the coronavirus was reported in the U.S. – causing markets to pullback again.
UK and European stock futures fell later.
End