Soft Earnings Data Weighed on Sterling

David Becker
BoE

European stock markets moving sideways, as the FTSE underperforms. The global stock market rally started to run out of steam in Asia and investors remain cautious during the European session, with the DAX moving sideways and the FTSE 100 underperforming. U.S. stock futures are also down. The Nikkei still closed with a 0.45% gain, but the ASX was down -0.04% at the close, after swinging between gains and losses earlier in the session. The Hang Seng underperformed amid profit taking and it seems investors need a fresh catalyst, before taking indices even higher. In Europe, markets started lower, but at least some Eurozone markets managed to claw back early losses as subdued July production numbers underpinned the ECB’s cautious stance on QE reductions. The FTSE 100 underperformed but managed to come back from early lows, amid still sluggish wage data, which offset the unexpected dip in the jobless rate and put pressure on Sterling.

WTI crude oil prices are up by 0.8% at $48.66. Prices are underpinning by weekly API data, which showed a 6.2-million-barrel increase in U.S. inventories in the week ending September 8, well up on the median forecast for a 3.2 million rise. The IEA also said in its monthly report, that “demand growth continues to be stronger than expected, particularly in Europe and the U.S.” as it lifted its 2017 global demand growth estimate to 1.6 million barrels per day from 1.5 million n barrels per day previously forecast.

Eurozone industrial production rose 0.1% month over month in July, in line with the consensus forecast. The modest uptick over the month lifted the annual rate to a strong 3.2% year over year from 2.8% year over year in the previous month. Manufacturing PMIs were relatively weak in July, but improved again in August and holiday timings may have contributed to the weakness in July, although the annual rate at 3.2% year over year already confirms that the recovery continues to strengthen in Q3.

UK Unemployment Dipped in July

The UK unemployment rate unexpectedly dipped to 4.3% in July, a new 42-year low, after 4.4% in June. However, the good news was more than offset by soggy earnings figures, with the average household income coming in at a nominal growth rate of 2.1% year over year in the three months to July, unchanged from the prior month’s figure but below the median forecast for a tick higher to 2.3% year over year. The wages data show that low unemployment levels are not translating into higher incomes. With yesterday’s inflation data showing headline CPI running at 2.9% year over year, aggregate wages in the UK remain firmly in negative growth. There are many theories about why wages at lagging, including the impact of the gig economy, “competition” from automation, and weakening of labor unions. Either way, the data suggest that the key consumer sector will remain relatively soft, and with it the UK economy in relative stagnation.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All

Top Promotions

Top Brokers

IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US