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Daily Briefing: UK services sector in focus, August slowdown seen
September 5, 2017 / 7:16 AM / 2 months ago

Daily Briefing: UK services sector in focus, August slowdown seen

LONDON (Reuters) - Today’s release of PMI surveys of the region’s huge services sector - by far the largest employer in most European countries - will be closely watched.

Workers use the stairs into the Bank underground train station, named for its proximity to the Bank of England, in the City of London financial district in London September 4, 2017. REUTERS/Toby Melville

In the UK, economists are predicting a slight slowing in August, which if confirmed would underscore the disconnect between the negative domestic impact of weak sterling and the boost it is giving exporters. The read-out for the euro zone is seen not budging from the previous month.

There was quite a shocker on the Swiss economy this morning, with GDP data showing it grew at its slowest annual rate in nearly eight years during the second quarter - a mere 0.3 percent compared to 0.6 percent for the start of the year, well down on forecasts. Tepid public spending and weaker foreign trade weighed on the export-reliant country.

Sebastian Kurz, the head of Austria's conservative People's Party (OVP) and frontrunner in opinion polls for a parliamentary election on Oct 15, presents his economic programme today. He has been criticised for being short on detail on his plans for the economy. Seen by many as the best hope of keeping the anti-immigrant Freedom Party out of power, Kurz is nonetheless part of a phenomenon that has seen many of the Freedom Party's own ideas reflected in mainstream politics. On Monday, for example, Kurz tapped into voter concerns about immigrants by calling for benefits for migrants to be cut.

In Northern Ireland, Sinn Fein said Gerry Adams would make a "significant address" at a pre-parliamentary term meeting of party lawmakers this morning. There is no guidance other than that it's likely to be a proposal on Northern Ireland.

MARKETS

Once again, there has been little follow-through on world markets after Monday’s relatively minor jolt on the latest North Korea scare - even as U.S. and international condemnations rang through the night at the U.N. Security Council meeting on the issue. The absence of Wall St for the Labor Day holiday was partly responsible, but the playbook for recent spikes in North Korean tensions has been to see market flurries quickly dissipate in the absence of any clear signs of a military response.

As with many political risks over the past couple of years, investors are reluctant to price in the tail risks on every possible bad outcome and have stayed focused on the more prosaic but significantly upbeat global economic momentum throughout.

Global service sector business surveys for August will be watched just as closely today as a result. Asia bourses, including South Korea’s Kospi, steadied after Monday’s losses. MSCI’s emerging markets index bounced back a touch. European stocks are set to open flat and Wall St futures are showing less than 0.2 percent net losses from Friday’s close. Japan’s Nikkei underperformed as the dollar remains on the back foot against the yen and more broadly. Gold and the Swiss franc nudged a fraction higher.

Editing by Gareth Jones

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