August 1, 2018 / 7:38 AM / 4 months ago

Daily Briefing: Factories read-out eyed ahead of BoE meet

LONDON (Reuters) - July manufacturing PMI data across Europe start to roll in this morning, with economists expecting on average a flat or slightly weaker read-out than in June.

FILE PHOTO: A worker examines an aluminium component at a factory in Shipley, Britain May 8, 2018

There will be much focus on the UK survey a day before the Bank of England is seen raising interest rates. Economists polled by Reuters expect the UK factory sector had a decent month even as concerns about Brexit and global trade tension remain.

The PMI for the much bigger services sector is only due to be published on Friday, a day after the BoE rate announcement, with economists forecasting a slight slowdown but not enough to change the big picture that Britain’s economy has recovered from its early 2018 slowdown. In the meantime, this morning's Nationwide survey showed UK house prices ticking up slightly more than expected in July.

Denmark today becomes the latest European country to explicitly ban the wearing of face coverings in public, a law which despite its generic wording is being universally interpreted as mostly targeting the country's Muslims.

Backers of the legislation say it is intended to uphold secular and democratic values; critics point to a 2013 study that showed barely 0.1-0.2 percent of Muslim women in Denmark - about 150 - actually wear a niqab, arguing that the measure is mainly a sop to anti-immigrant sentiment.

In France, the controversial 2011 ban on wearing veils in public spaces added to a broader sense of alienation felt by many Muslims and there was evidence that it encouraged attacks in the street on women wearing (still legal) headscarves as well. In Denmark, niqab-wearers will be joined by non-niqab-wearing Muslim women and also non-Muslim Danes in a protest rally today.

MARKETS AT 0655 GMT

Apple managed to soothe tech sector nerves but mixed signals on the U.S.-China trade war are keeping world markets on tenterhooks.

The U.S. tech giant beat quarterly earnings forecasts and revenue from iPhone sales were ahead of expectations, lifting Apple stock almost 4 percent after the closing bell on Wall St late Tuesday and as the company recorded another $20 billion of stock buybacks during the quarter.

The positive results helped offset concern about other tech sector leaders Facebook, Twitter and Netflix – all of whom have disappointed markets in one way or another over the past week of the reporting season.

While S&P500 futures were flat after gains of almost 0.5 percent on Tuesday, Japan’s Nikkei, South Korea’s Kospi and Taiwan’s main benchmark stock index all rose more than half a percent early on Wednesday.

The tech relief from Apple was undermined by fresh anxiety over world trade, however, with reports overnight that Washington may more than double its proposed tariffs on some $200 billion of Chinese goods – due to come into effect as soon as next month after a period of public consultation – to as much as 25 percent from the 10 percent already outlined and that an announcement on that was due as soon as Wednesday.

That undermined optimism about renewed détente in the row after reports U.S. Treasury Secretary Mnuchin and a trade delegation were seeking to reopen talks with Beijing.

The trade worries, alongside a disappointing manufacturing survey for July, sent Shanghai stocks down almost 2 percent and Hong Kong’s Hang Seng down 0.6 percent, pushing the yuan lower again too.

Stuck in the middle, European stock futures were marked slightly lower. World markets were also anxiously awaiting the latest policy decision from the U.S. Federal Reserve later too. While no change in interest rates is expected today, there will be caution over any signals about the amount of further rate hikes later this year.  U.S. Treasury yields and the dollar was higher across the board first thing on Wednesday.

— A look at the day ahead from European Economics and Politics Editor Mark John and EMEA markets editor Mike Dolan. The views expressed are their own —

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