Tuesday Sep 3 2024 10:27
4 min
European stock markets were a touch firmer early on Tuesday, with the DAX almost touching 19,000 on a gain of a third of a percent. The FTSE 100 traded virtually flat at 8,367 after slipping 0.2% yesterday, whilst the CAC was a little firmer at 7,668. US futures point to a mixed open with the S&P 500 index up a few points at 5,652 and Dow Jones seen shedding around 60 points at the open to 41,500.
The key focus today is US ISM Manufacturing PMI, which is expected at 47.5 vs. 46.8 prior. Last month’s survey was the weakest since Nov 2023. Remember the ISM was the initial trigger for the early August selloff, probably mainly on the employment sub-index, which hit a four-year low. The employment survey fell to 43.4 versus 49.3 in the prior month. We could see some dovish repricing in rates and FX if there is further weakness.
As far as sterling goes, the BRC Retail Sales Monitor picked up 1% in August as the weather improved.
GBPUSD steadied a bit yesterday after notching three straight daily declines in the wake of rallying above 1.32 to hit its best in over two years. USD picked up a bit again overnight before sterling attracted some bids at the open in London.
Swiss franc strength: EURCHF touched a record low in August and is not too far above this level today.
Today’s inflation report in Switzerland suggests there is more scope for the Swiss National Bank to enter the market – perhaps a 50-basis-point cut to weaken the franc, rather than direct intervention. Annual core inflation was steady at 1.1% with headline level also down to 1.1%.
The Brent oil price was close to the bottom of its range despite supply concerns from Libya. Demand concerns were seemingly more pressing after the soft China manufacturing PMI showed the survey falling to a 6-month low, with export orders falling for first time in 8 months.
A Reuters survey indicates OPEC oil output fell in August to its lowest level since January. The US Manufacturing PMI data today will be important.
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