Joshua Mahony MSTA
Scope Markets
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Payrolls and holidays effect slows market action
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UK services growth slows to three-year low
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Morrison’s manages to grow despite tough conditions
Nothing quite puts the buffers on market conviction like the hugely unpredictable US jobs report, due tomorrow. The shadow cast by tomorrow’s volatile payrolls figure was always going to cause hesitancy among traders who know only too well the impact a jobs report can have upon market sentiment and direction. With payroll-fuelled uncertainty, coupled with national holidays in Japan, Belgium, France, Germany and the Netherlands, it is no wonder why we are seeing this week’s selling pressure unwound at the start of today’s trading.
Today’s disappointing UK services PMI wraps up a hat-trick of weak numbers this week, providing the clearest indication yet that UK growth is moving in the wrong direction in Q2. With the services sector making up 79% of UK GDP, today’s three-year low for the services PMI indicates that not only will expectations of growth be lower, but the chance of a 2016 rate hike just fell further.
Supermarkets are back in the headlines, as Morrison’s managed to regain the upper hand with like-for-like sales (ex-fuel) rising 0.7%. While not exactly stellar growth, this proves the firm is back on a more stable footing. With the introduction of the popular ‘food to go’ range, alongside an expansion of self-service and express checkouts, there still seems to be room for growth yet.
Ahead of the open we expect the Dow Jones to start 104 points lower, at 17,755.
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