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Pound touches over $1.30 against dollar as dovish Fed speech knocks interest rate hike hopes

Market report
A cautious speech from a US Federal Reserve policymaker warning that persistently weak inflation could dash interest rate hike hopes propelled the pound back over $1.30 against the dollar for the first time in over three weeks.
As central banks zoomed back into the markets’ focus this week, dovish rate-setter Lael Brainard prodded the dollar’s soft spot by commenting that US inflation, which currently stands at 1.4pc, is “well short” of its 2pc target and that the Fed’s policymakers should be “cautious” on hiking until they are confident inflation can pick-up.
With the ECB’s own tapering plans in the balance, fears that its president Mario Draghi will swerve an announcement on winding down its ˆ6bn (?5.5bn) a month quantitative easing programme at the central bank’s policy meeting tomorrow halted sterling’s drift towards parity with the euro yesterday, the pound advancing 0.6pc to above ˆ1.09 against the currency.
“A less certain monetary policy path in the eurozone and the US can provide the pound with moments of relief despite the uncertainty the UK faces,” Caxton currency markets analyst Alexandra Russell-Oliver argued on how the pound may reverse its recent woes.
Sterling’s strong gains against the two currencies created an uphill battle for the FTSE 100’s raft of overseas earners already struggling after Kim Jong-un’s sabre-rattling spooking investors.
The US couldn’t avoid the risk-off mood on its return to trading following its bank holiday with stock prices falling even more sharply in New York. The FTSE 100’s 38.55 point fall to 7,372.92 was, however, softened by heavyweight Royal Dutch Shell ‘B’ nudging up 5p to ?21.58 due to oil prices rallying as the US’ refining hub disabled by Hurricane Harvey began to return to normality.
Elsewhere, Merlin Entertainments jumped to the top of the blue-chip leaderboard, advancing 9.6p to 467p, after broker Morgan Stanley said that it believes the theme park and hotel giant is close to confirming a new Legoland park in New York, which it said will add 8pc to its core “ebitda” earnings by 2020.
Reiterating his “overweight” rating for Merlin, analyst Jamie Rollo said that the company should have also benefited from a “staycation” bounce from squeezed UK households during the summer.
On the FTSE 250, software company Aveva tying up its merger with French multinational giant Schneider Electric at the third attempt caused its shares to skyrocket 26pc, or 494p, to ?24.14. 
Mid-cap housebuilder Redrow’s record results and upped guidance lifted it 27p higher at 647p with its FTSE 100 peer Barratt Developments nudging up 6.5p to 624p on a read across ahead of its results today.
Finally, app distribution platform appScatter raised ?9m on its entry to AIM, its shares rising 15pc to 75p on its first day of trading. 
6:01PM
Markets wrap: Pound jumps above $1.30 against the dollar as Fed rate-setter dashes interest rate hike hopes
Pound touches over $1.30 against dollar as dovish Fed speech knocks interest rate hike hopes

Lael Brainard has sunk the dollar this afternoon with her comments on inflation
The pound's afternoon rally against the dollar killed off any hopes that the FTSE 100 could brush off geopolitical fears and rebound back into positive territory today.
US Federal Reserve policymaker Lael Brainard sent the dollar sinking on currency markets after warning that inflation was "well short" of its target. She urged her fellow rate-setters to be "cautious" when deciding on hiking interest rates with the pound jumping 0.8pc against the dollar today.
Sterling hasn't been deterred by the latest IHS Markit PMI survey showing weaker-than-expected growth in the services sector as cost pressures pulled down the most important part of the UK economy.
Meanwhile over in the US, equities have lurched into the red as trading returned in New York following a bank holiday with the weekend's weapons testing on the Korean Peninsular blamed for this afternoon's losses.
IG's market analyst Joshua Mahony said this on today's action:

"Early FTSE gains have faded away this afternoon, as the shift into safe haven assets continues to drive money into gold and the yen at the expense of assets perceived as riskier.
"Despite a lack of fresh news about the North Korean situation today, there is a clear feeling that the regular missile tests are set to continue and keep the whole region on edge. There’s little appetite for short selling the safe havens at the moment, and the likes of the yen and gold are attracting flows."
4:49PM
FTSE 100 closes 0.5pc lower
Pound touches over $1.30 against dollar as dovish Fed speech knocks interest rate hike hopes

The pound's advances killed off hope that the FTSE 100 could rebound from yesterday's losses
The pound's afternoon rally against the dollar on those US Federal Reserve comments killed off any hope that the FTSE 100 might rebound from yesterday's losses. The UK's blue-chip index has finished 0.5pc lower with financial stocks coming off worst in London this afternoon. Our markets wrap and market report will follow soon...
4:21PM
Fed policymaker urges caution on interest rates
Pound touches over $1.30 against dollar as dovish Fed speech knocks interest rate hike hopes

US Federal Reserve policymaker Lael Brainard with former chancellor George Osborne
Although the pound had already advanced on the dollar this morning, US Federal Reserve policymaker Lael Brainard's comment that inflation is "well short" of its target has propelled sterling over $1.30 for the first time in over three weeks.
Ms Brainard, a dovish member of the FOMC, urged for caution on hiking rates due to the US' persistently weak inflation.
Here are a few snippets from her speech that are worth a look at:

"Despite this benign picture for the U.S. economy and continued increases in resource utilization, core inflation, as measured by changes in the PCE price index for items other than food and energy, slowed by almost 1/2 percentage point relative to the pace a year ago. Indeed, both overall and core inflation were only 1.4 percent for the year through July, well short of the Federal Open Market Committee's (FOMC) objective...
"Once balance sheet normalization is under way, I will be looking closely at the evolution of inflation before making a determination about further adjustments to the federal funds rate. We have been falling short of our inflation objective not just in the past year, but over a longer period as well. My own view is that we should be cautious about tightening policy further until we are confident inflation is on track to achieve our target."
4:12PM
DS Smith completes giant US deal as sales remain high
Pound touches over $1.30 against dollar as dovish Fed speech knocks interest rate hike hopes

DS Smith supplies packaging to different sectors, including online retailers and food businesses
Sales at packaging company DS Smith are continuing to improve, as the firm completes its giant deal to acquire a US company and gain a foothold in the American market.
The firm said in a trading update ahead of its annual general meeting on Tuesday that sales growth since May 1 has been well ahead of the same period last year, meeting its expectations.
“Progress with our pan-European and e-commerce customers was particularly strong again,” it said, adding that the last quarter had been "encouraging". It has also benefited from a recovery in paper prices after costs rose earlier in the year.
Read Rhiannon Bury's full report here
3:45PM
Fidelity and Hermes join calls for Sports Direct chairman Hellawell to go
Pound touches over $1.30 against dollar as dovish Fed speech knocks interest rate hike hopes

Sports Direct chairman Keith Hellawell
Sports Direct is bracing for yet another stormy encounter with shareholders on Wednesday as Hermes and Fidelity join the pack of independent investors and advisory groups rebelling against chairman Keith Hellawell.
Former police chief and drugs tsar Keith Hellawell has committed to stepping down from the board if the majority of independent investors revolt again at Sports Direct's annual meeting, which could spell further boardroom upheaval for the sportswear retailer.
Fidelity, which owns a 6pc stake in Sports Direct, is understood to be voting against Mr Hellawell - joining Aberdeen Standard Investments, Royal London and Legal & General is rebelling against the longstanding chairman.
Glass Lewis, Pirc and the Institutional Shareholder Service have all recommended shareholders vote against Mr Hellawell’s re-election.
Read Ashley Armstrong's full report
3:18PM
US equities fail to avoid risk aversion; pound flirts with $1.30 after Fed comments
Pound touches over $1.30 against dollar as dovish Fed speech knocks interest rate hike hopes

US stocks have retreated early on in New York
US stocks have had their dose of risk aversion this afternoon and retreated firmly into the red after avoiding the North Korea-related sell-off yesterday due to a bank holiday.
Internationally-exposed financials have pulled down the Dow Jones most with the US benchmark index sinking 0.5pc early on.
*BRAINARD: CAUTIOUS ON HIKING AGAIN UNTIL INFLATION ON TRACK— Michael Hewson ?? (@mhewson_CMC) September 5, 2017
Meanwhile on the currency markets, the pound is taking advantage of the dollar being knocked by US Federal Reserve policymaker Lael Brainard saying that inflation is falling "well short" of its 2pc target, meaning that the planned hike in interest rates before the end of the year could be delayed.
Sterling has jumped 0.6pc higher against the dollar and is now flirting with the $1.30 mark for the first time since mid-August. 
2:53PM
Growth in UK services sector falls to 11-month low
Pound touches over $1.30 against dollar as dovish Fed speech knocks interest rate hike hopes

The services sector includes the UK's big financial firms 
Growth in the services sector has fallen to its lowest rate in almost a year, in a further blow to the UK economy.
The sector, which covers everything from banking to teaching and accounts for around 75pc of Britain’s GDP, grew at a slower rate in the month of August, according to the latest purchasing managers index (PMI) from IHS Markit.
Expectations of growth came in at 53.2 in August, lower than the 53.8 recorded in July and below the 53.5 forecast by economists. This makes last month the weakest since September 2016.
Firms blamed “subdued client demand” and rising uncertainty about the UK economic outlook for the lack of strong growth.
Read Rhiannon Bury's full report here
2:24PM
US markets preview
Pound touches over $1.30 against dollar as dovish Fed speech knocks interest rate hike hopes

US stocks are expected to nudge down this afternoon
The US is beginning to wake up across the Atlantic and after missing the North Korea pull-back yesterday on equity markets due to a bank holiday American stocks are expected to retreat into the red.
There isn't much economics data to distract traders from the tensions on the Korean Peninsular this afternoon with factory orders data for July the pick of the bunch stateside.
Spreadex analyst Connor Campbell provided this preview of the action in the US:

"Looking to this afternoon and after missing much of the North Korea-reaction due to Labor Day the US markets are set for a sluggish start. The Dow Jones is facing a flat open when the bell rings on Wall Street, keeping the index around the 21900 mark.
"Beyond any further nuclear developments the only other thing to focus on this afternoon is the factory orders figure, set to plunge from 3.0% to -3.3% month-on-month."
1:59PM
Attention begins to shift to European Central Bank
Pound touches over $1.30 against dollar as dovish Fed speech knocks interest rate hike hopes

Mario Draghi could announce the change in monetary policy this week
With investor angst over North Korea waning, the markets' gaze is now beginning to shift towards the European Central Bank's policy meeting on Thursday.
The ECB is thought to be on the verge of announcing the winding down of its ˆ60bn-a-month quantitative easing programme as the eurozone's robust recovery continues but the strength of the euro could actually delay the central bank's plans.
Analysts believe that the ECB is worried that the strong euro will weigh on inflation and thus delay the central bank plan to tape its asset-purchasing programme. 
Reports that the announcement by ECB president Mario Draghi could be delayed until December are exaggerated, however, according to IG's chief market analyst Chris Beauchamp.
If  Mr Draghi doesn't announce the change in monetary policy on Thursday then October 26 and December 14 are the next key opportunities for him to announce a shift in policy.
Mr Beauchamp commented:

"Absent some commitment to actually boost the QE programme, it seems there is little that the ECB can really do to stop euro appreciation. After all, economic growth continues, which makes eurozone stocks attractive. And to buy eurozone stocks, you need to buy euros first.  
"A higher euro would tend to mean that the major eurozone indices will continue to suffer, continuing the downtrend that has persisted since June. For now, it seems difficult to perceive a means by which the ECB can arrest the euro’s rise, since at some point the bank will want to cut back further the monthly asset purchase programme. But for the moment, it may not have much choice but to carry on as before, in a bid to boost inflation."
1:33PM
10 cheap items to buy today that could make you a fortune
10 cheap items to buy today that could make you a fortune
As interest rates on savings continue to shrink, and with household income falling, people are considering other means of making extra cash - including snapping up collectibles.
Gumtree and antiques expert Tracy Martin have teamed up to predict which everyday items are likely to be worth a small fortune in years to come.
12:58PM
The North Sea must ‘earn its right to grow’, says Shell boss
Pound touches over $1.30 against dollar as dovish Fed speech knocks interest rate hike hopes

Shell boss Ben Van Beurden said the North Sea needs to “earn its right to grow” amid “challenging times” for the oil and gas sector
The North Sea still has the support of supermajors BP and Royal Dutch Shell but the basin will need to earn its right to grow within a rapidly changing energy landscape, oil bosses have warned.
Oil industry heavyweights have converged on Aberdeen this week for a conference focused on the future of the North Sea as oil majors shift their portfolios towards low cost oil, petroleum products, gas and even renewables.
Ben Van Beurden, Shell’s chief executive, said the Anglo-Dutch group is still committed to the basin after its $3bn sell-off to private equity backed Chrysaor, but added that the North Sea needs to “earn its right to grow” amid “challenging times” for the oil and gas sector.
The North Sea was hard hit by the recent oil price crash due to higher costs. In the wake of the downturn oil producers in the region will need to adapt to a lower range of oil market prices and slow but steady shift towards lower carbon energy options.
Read Jillian Ambrose's full report here
12:49PM
Lunchtime update: UK services sector slowdown sharper than expected
Pound touches over $1.30 against dollar as dovish Fed speech knocks interest rate hike hopes

The services sectors hasn't grown this slowly since September 2016
Growth in the UK services sector in August slowed to its weakest level in almost a year, IHS Markit's latest PMI survey revealed this morning. 
Increasing cost pressures and heightened economic uncertainty pulled down the UK's most important sector last month with IHS Markit commenting that the recent weakness in the construction and services sectors will send "warning signals" on the health of the UK economy.
That hasn't deterred the pound, however, which has made small gains on the currency markets, rising 0.3pc against the dollar to $1.2959.
That mid-morning rally has wounded a modest recovery on the FTSE 100 this morning with Reckitt Benckiser pulling down the index most as the dust settles from its boardroom reshuffle yesterday.
On the FTSE 250, software maker Aveva has surged 27pc after finally reaching an ?3bn deal to merge with French giant Schneider Electric at the third attempt.
Here's the current state of play in Europe: 
FTSE 100: -0.05pc
DAX: -0.17pc
CAC 40: +0.03pc
IBEX: -0.17pc
12:29PM
Bitcoin price drops 20pc in three day
Pound touches over $1.30 against dollar as dovish Fed speech knocks interest rate hike hopes

Bitcoin plummeted after reaching its $5,000 peak
The price of Bitcoin has plummeted in the last three days after the virtual currency hit record levels.
Values of other cryptocurrencies such as Ethererum and Ripple have also plunged, wiping billions off their combined values.
The currencies have exploded in value in recent months amid surging interest in initial coin offerings (ICOs), a newly-popular way for companies to raise funds.
The surging prices of Bitcoin, Ethereum and others had appeared to defy warnings of a bubble, but sceptics believe that a crash will only be a matter of time.
Read James Titcomb's full report here
Bitcoin value last 364 days
12:04PM
Games Workshop says profits and revenues 'well above' previous year as recovery continues  
Pound touches over $1.30 against dollar as dovish Fed speech knocks interest rate hike hopes

Board game Space Hulk is set in the fictional universe of Warhammer 40,000 
The recovery of Games Workshop shows no signs of slowing as the miniature figurine manufacturer revealed that profits are “well above” the previous year.
In a brief update to the stock market, the Nottingham-based company said both revenues and profits for the year were considerably ahead of the same period in the previous financial year.
The update, which includes the announcement of a dividend of 35p per share, sent Games Workshop’s share price up by more than 10pc in early trading.
It marks the latest step in the company’s comeback from a challenging year in 2015, when it was hit by disappointing Christmas sales and a slowdown on the high street.
Read Sam Dean's full report here
11:53AM
Merkel's clean air pledge lifts German carmakers; FTSE 100 lacking 'catalyst'
Pound touches over $1.30 against dollar as dovish Fed speech knocks interest rate hike hopes

Ms Merkel has pledged more clean air aid to help slow restrictions on diesel cars
The FTSE 100 is lacking a "catalyst" to kick-start its day of trading, according to Accendo Markets head of research Mike Van Dulken.
The UK's blue-chip index has been weakened by a rallying pound while the DAX in Germany has jumped 0.5pc higher as its big car producers rise on chancellor Angela Merkel's pro-automobile industry rhetoric.
She has said that she would double the budget for clean air aid in order to reduce the threat of restrictions on diesel cars.
Mr Van Dulken said on today's movements in Europe:

"European equities are positive to differing degrees. The UK FTSE needs a catalyst to escape this week's range, Germany's DAX is flirting with a bullish breakout on Autos-friendly rhetoric from Merkel and Dow Jones futures are testing their highs of the week before investors return from the Labor day long weekend.
"Sentiment is positive despite ongoing geopolitical issues, investors further demonstrating their thick skin. Helping out is a combination of M&A from both sides of the Atlantic, stable macro data in the Eurozone and continued gains for metals and oil."
11:36AM
Retail sales pick-up to 1.3pc; weak comparable flatters figures
Pound touches over $1.30 against dollar as dovish Fed speech knocks interest rate hike hopes

While retail sales growth rebounded, the figures were up against a "dismal" August last year
There is some slightly less bleak data on the UK economy from the British Retail Consortium for traders to digest this morning but it comes with a big dollop of caveat.
The BRC's latest data showed that retail sales growth in August rebounded to 1.3pc compared to the previous year but it is being compared to a very weak August for sales growth last year.
The BRC said that non-food sales returning to growth "as shoppers’ attentions turned to homewares, autumn clothing ranges and the new school term" underpinned the figures.
Helen Dickinson, the BRC's chief executive, said that the figures paint a more positive picture on the health of consumer spending than the reality.
She explained:

"Non-food sales have only just recovered to levels seen two years ago, after a dismal August in 2016; while strong figures for food are largely the result of rising prices, leaving growth in volume terms weaker than last year.
"Stark challenges lurk around the corner for the retail industry. Purchasing decisions are very much dictated by a shrinking pool of discretionary consumer spend, with the amount of money in people’s pockets set to be dented by inflation and statutory rises in employee pension contributions in a few months’ time. It’s therefore crucial to protect consumers wherever possible from further cost pressures. "
11:11AM
Stock markets update: Software maker Aveva soars 30pc after finally agreeing merger with Schneider Electric
Pound touches over $1.30 against dollar as dovish Fed speech knocks interest rate hike hopes

Redrow is one of the top gainers on the FTSE 250
With all that services sector growth excitement, we've neglected the big movers on the stock markets in London this morning.
Software maker Aveva shares have soared almost 30pc after finally reaching an agreement to merge with French multinational Schneider Electric at the third time of asking while housebuilder Redrow has popped 4.6pc on its record results with the other housebuilders enjoying a boost from a read across.
Oil shares are among the top gainers on the FTSE 100 after the price of crude firmed up following last week's Hurricane Harvey-related losses but their heavy weighting is not enough to stop the overall index slipping towards flat territory.
At the other end, consumer goods giant Reckitt Benckiser has retreated 2.4pc on a broker downgrade from Exane BNP Paribas while gold producers Fresnillo and Randgold Resources have retreated as quickly fading investor angst over North Korea pulls down safe haven gold.
10:32AM
Services growth slowdown reaction: Figures suggest economy is struggling to pick-up
Pound touches over $1.30 against dollar as dovish Fed speech knocks interest rate hike hopes

The weighted average of the three PMIs is comfortably below the levels that have prompted the MPC to raise interest rates in the past, says Pantheon Macro
Today's services sector growth shows that the economy is "struggling to pick-up the pace in the third quarter", commented Capital Economics' UK economist Paul Hollingsworth.
He said that the combined PMI reading – which includes manufacturing, construction and services – is consistent with growth of around 0.4pc for the third quarter, a slight acceleration from 0.3pc in the previous quarter.
Pantheon Macro UK economist Samuel Tombs agrees that the figures show "modest GDP growth in the third quarter".
He said:

"Despite the slowdown, the largest majority of services firms since July 2015 reported that work backlogs increased in August. In response, firms hired the most workers in 19 months and offered slightly higher wages to retain key staff; the input price index picked up to its highest level since February.
"But with the decline in the new orders index to 54.2 in August from 54.7 in July signalling continued weakness in demand, we doubt that stronger rates of growth in either employment or wages will be sustained."
Something for everyone in the services UK PMI numbers today which were at an 11 month low https://t.co/TdG63cT4Zf pic.twitter.com/atV7jCkhDk— Chris Bailey (@Financial_Orbit) September 5, 2017
10:19AM
Services growth slowdown reaction: Cost pressures may alert Bank of England's MPC
UK services PMI - moving further away from Bank of England rate hike territory pic.twitter.com/M7aTsXhGNJ— Andy Bruce (@BruceReuters) September 5, 2017
Dean Turner, economist at UBS Wealth Management, said on today's disappointing services growth figures that the cost pressures highlighted in the report could draw the attention of the Bank of England's Monetary Policy Committee.
 Mr Turner added this on today's data:

"The most interesting aspect of the report was the reference to cost pressure and the outlook for hiring which accelerated for the third consecutive month. As unemployment is already low, this adds to the concerns that labour shortages could start to push wages higher in the months ahead. With this in mind, today’s figures could make the Monetary Policy Committee sit up and take note.
"That said, it remains our view that the Bank will keep interest rates on hold through 2018. The data is not as strong as some would hope, and with inflation likely to peak around the turn of the year, as well as the uncertainties presented by Brexit, it’s unlikely there’ll be much of an appetite for the majority of the MPC to raise rates anytime soon"
9:58AM
Services sector growth slows in August; data sends 'warning signals' about health of UK economy
UK Services PMI slips to 53.2 in August, lowest since September 2016 #PMI #BOE #GBP pic.twitter.com/HisB3GpY4R— Sigma Squawk (@SigmaSquawk) September 5, 2017
This morning's services PMI data slowdown shows growth in the sector at its weakest since September 2016, the drop-off being far sharper than economists had forecast.
IHS Markit said that stronger cost pressures across the sector had pulled down the reading with input price inflation at its fastest since February. It was the sector's 13th consecutive month of growth but the report said that subdued client demand and heightened uncertainty about the economic outlook had weighed on growth.
Chris Williamson, chief business economist at IHS Markit, said that today's services sector figures could be warning signals for the UK economy.
He added:

"Robust manufacturing growth means the economy may be rebalancing towards goods production, aided by the weaker pound, but the slowdowns in services and construction send warning signals about the health of the economy.
“In services, the weaker growth trend was most evident in consumer–facing sectors such as hotels & restaurants and other personal services, which includes businesses such as cinemas, gyms and hairdressers.
"The overall level of optimism also remained subdued, mainly linked to Brexit uncertainty, close to levels that have previously been indicative of the economy stalling or even contracting."
9:35AM
Growth in the UK services sector slows
Pound touches over $1.30 against dollar as dovish Fed speech knocks interest rate hike hopes

Services sector growth across Europe was weaker than expected
Growth in the UK services sector slowed in August, according to IHS Markit's latest PMI survey.
Services PMI fell to to 53.2 from July's uptick, a weaker-than-expected performance from the sector. The pound retreated to flat territory against the dollar ahead of the figures but has steadied since the disappointing data dropped, trading at $1.2922.
9:19AM
Redrow posts record results and hikes dividend by 70pc  
Pound touches over $1.30 against dollar as dovish Fed speech knocks interest rate hike hopes

Redrow has hiked its dividend in its results this morning
FTSE 250 housebuilder Redrow has made light of the slowdown in the housing market by posting record results and hiking its dividend by 70pc.
Redrow said its pre-tax profits for the year to the end of June had increased by 26pc to ?315m as revenues jumped 20pc to a record ?1.66bn.
Revenues were boosted by a 7pc increase in Redrow’s average selling price, to ?309,800. Legal completions, meanwhile, grew 15pc to 5,416.
The strong set of results allowed the company to raise its full-year dividend by 70pc to 17p and upgrade its profit guidance in the medium term. The update sent Redrow shares up more than 5pc in early trading.
Read Sam Dean's full report here
Redrow
9:13AM
Eurozone services PMI data hints at weaker-than-expected UK reading
Eurozone final services PMI for August revised lower to 54.7 from 54.9 #PMI #EUR pic.twitter.com/T4SxVyqcyZ— Sigma Squawk (@SigmaSquawk) September 5, 2017
Italy Services PMI makes it a poor start to the day; 55.1 vs 55.5e however the prior 56.3 was a 10yr high— Mike van Dulken (@Accendo_Mike) September 5, 2017
The eurozone's services PMI figures have dropped a little earlier than our own and if they are anything to go by then we should be expecting a sharper drop-off than initially thought in our own sector's performance.
Spain, France, Italy and the overall eurozone all underperformed economists' expectations this morning with only Germany defying the trend. Some analysts have pointed out that some of those falls are from multi-year highs but nonetheless economists thought the sector would hold out better than it has.
Following the disappointing figures on the continent, the pound has nudged up against the euro, trading 0.1pc higher at ˆ1.0879. 
There were no signs of a slowdown over in China, however, with their services sector growth picking up to 52.7 overnight. 
#China Caixin services PMI +1.2 to 52.7 in Aug. Not much slowdown here pic.twitter.com/qk2TwOmQ7K— Shane Oliver (@ShaneOliverAMP) September 5, 2017
8:56AM
Services PMI preview: Growth in UK's most important sector expected to soften
Pound touches over $1.30 against dollar as dovish Fed speech knocks interest rate hike hopes

The services sector could outperform expectations, according to CMC Markets analyst Michael Hewson
The contrasting growth figures in the manufacturing and construction sectors' latest PMI surveys have cranked up the pressure on the services sector's own reading due today.
Growth in the sector, the UK's most important, is expected to weaken slightly to 53.5 from July's solid 53.8 reading (any figure above 50 indicates growth).
The closely watched survey due at 9.30am will provide investors a few more clues to the health of the UK economy with the construction PMI slipping to a one-year low yesterday and Friday's manufacturing PMI figure showing the sector continuing to rebound.
CMC Markets' analyst Michael Hewson believes that it wouldn't be a surprise to see the services sector outperform expectations.
He added on recent UK PMI figures:

"The weak construction number contrasted with last weeks continued improvement in manufacturing and as such makes today’s services PMI number that much more important, given some of the recent softness seen in recent surveys here.  
"In July we saw a nice uptick to 53.8, after a bit of a slowdown in June, and it is expected that we might see some softening in August back to 53.5, though it wouldn’t be a surprise if we did outperform, particularly in areas that support travel, leisure and tourism."
8:35AM
Agenda: Services sector data dominates investor focus
Pound touches over $1.30 against dollar as dovish Fed speech knocks interest rate hike hopes

Growth in the services sector is expected to soften slightly
Welcome to our live markets coverage.
Services PMI data dominates the markets' focus this morning with the reading holding added importance given the contrasting fortunes of the manufacturing and construction sectors in their own recent PMI readings.
Ahead of the figures the pound has nudged up against the dollar, trading 0.1pc higher at $1.2935.
Asia stocks on defensive after N Korea selloff but #China shares & Copper up on econ optimism. Bitcoin continues to fall after China action. pic.twitter.com/cXvKmYXlb4— Holger Zschaepitz (@Schuldensuehner) September 5, 2017
North Korea's latest nuclear tests knocked risk appetite yet again yesterday but the increasing regularity of the rogue state's provocations meant that the pull-back on stocks markets is becoming more mild with each escalation.
While shares retreated into the red once again and the usual safe haven suspects, gold, Japanese yen and Swiss franc, pushed higher, financial markets are numbing to Kim Jong-un's sabre-rattling with the FTSE 100 only slipping 0.36pc yesterday.
Although mild caution still persists today, stock markets across Europe have clawed back lost ground with the FTSE 100 propelled into positive territory by the housebuilding sector.
Barratt Developments leads the pack on the blue-chip index ahead of its full-year results tomorrow after rival Redrow reported record results and upgraded its guidance.
Interim results: Dalata Hotel Group, IQE, Cairn Homes, Vipera, Alpha Fx Group
Full-year results: Alumasc Group, A & J Mucklow Group, Mattioli Woods, Redrow
AGM: 888 Holdings
Trading statement: Mattioli Woods
Economics: BRC Retail Sales Monitor y/y (UK), Services PMI (UK),  Final Services PMI (US), Factory Orders m/m (US), ISM Non-Manufacturing PMI (US), IBD/TIPP Economic Optimism (US), Final Services PMI (EU), Retail Sales m/m (EU), Revised GDP q/q (EU)

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