European markets on the rise despite Eurozone PMI declines

European markets continue to tread a positive path, with all major indices in the region moving higher in early trade despite a raft of concerning PMI data points released from France and Germany. Once again, we have seen signs of economic distress from the German manufacturing sector, with the decline to 42.1 marking the lowest point in five-months. Crucially, this report saw plenty cause for concern, with continued declines in new orders and manufacturing output forcing companies to cut back on staff. While the Paris Olympics helped drive a sharp uptick in French services sector activity, the data seen this morning does help strengthen the rhetoric around a potential weakness within the eurozone economy that the ECB will need to address.

US markets are expected to remain on the front-foot today, with traders processing yesterday’s FOMC minutes ahead of tomorrow’s Jackson Hole appearance from Jay Powell. While the committee opted to keep rates steady at their July meeting, the minutes highlighted a widespread acceptance that they could yet have to ease in September should data dictate. The sharp downward revision to the BLS payrolls data highlighted just why the Fed are expected to ease next month, and the impending Jackson Hole appearance from Powell provides the basis for a fresh reminder of the pivot that looks to be around the corner.

For today, traders will be keeping a close eye out for the impending unemployment claims and PMI data out of the US. Coming off the back of two declines in the weekly initial jobless claims, markets are expecting an uptick to serve as a reminder of the instability within the jobs markets. However, traders should instead focus on today’s services PMI data, with any notable decline in this figure helping to ease inflation concerns given the fact that US price gains have been almost entirely driven by the services sector.