Spreadex Market Update

FTSE falls as Brent Crude slips and sterling gets services PMI shine



While the Eurozone indices overcame their initial sluggishness to continue the recent relief rally, the FTSE was put on the back foot by a rebounding pound and a Brent Crude wobble.

With the services reading sealing a hat-trick of better than forecast May PMIs, coming it at a 3 month high of 54.0 against the 52.9 forecast, sterling got a fairly decent boost on Tuesday. Against both the dollar and the euro the currency climbed half a percent, teasing $1.338 against the former while grazing €1.144 against the latter.

Combine this with the RBS-led decline in the banking sector, and losses for BP and Shell as Brent Crude fell back towards $74.50 per barrel, and the FTSE had little reason to match its Eurozone peers. Instead the UK index fell 40 points, once again returning to 7700, a level it hasn’t had much luck escaping in the past week.

Despite a month-on-month decline in the region-wide services PMI, the Eurozone indices revved up their early June gains as Tuesday went on, posting the kind of growth that looked like it had petered out at the start of the session. The DAX led the way, jumping 0.9% to near 12900 for the first time in a week; the CAC, meanwhile, increased 0.6%, with the IBEX and FTSE MIB rising around 0.5% apiece.

Turning to the US open and the Dow Jones looks set to arrive somewhere in the middle of its UK and Eurozone colleagues, the futures suggesting a meagre 0.1% increase after the bell. Still, that keeps the Dow above 24800, and means it is seemingly going to continue to ignore the US vs The World trade battle brewing in the background.

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