Higher prices in the latest services PMI have helped sterling put yesterday’s Brexit shambles behind it, while the FTSE 100 is 12 points higher in mid-morning trading.
Brexit talks fall apart, but hopes of a deal persist
Services PMI drops but prices rising at a faster rate
Ferguson powered by US growth
Markets continue to digest yesterday’s Brexit disappointment, with the pound off the highs of Monday’s session and the FTSE 100 taking the chance to rally once again. The delicate choreography of these occasions brings to mind the eurozone crisis summits of old; signs of agreement, then hopes dashed, followed by a last minute resolution and much back-slapping all round. We are in the second of these four stages, but all sides still seem determined to cobble something together next week. Even a weaker services PMI number failed to put much pressure on sterling, as the release showed that price rose at their highest rate since early 2008. This has been taken to mean the BoE will have to become more hawkish, with sterling’s weakness leading to imported inflation. As a result the FTSE 100 has seen its early gains cut back, with stock market continuing to lag in stark contrast to the never-ending rally for US markets.
A stronger quarterly performance overall for Ferguson has been overshadowed by the problems in its UK division. The name-change to Ferguson reflects the group’s desire to double-down on its US operations, which continue to bring home the bacon, while it looks increasingly likely that the firm will move towards a disposal of its UK division in order to put its Wolseley past behind it.
Ahead of the open, we expect the Dow to start 82 points higher, at 24,372.
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