Joshua Mahony MSTA
Scope Markets
While the North Korean situation remains a backdrop, we are seeing UK stock indices gain this morning thanks in part to a falling pound in the wake of a weak services PMI survey
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Indices tentatively regain ground
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US markets re-open later, bringing higher volumes and volatility
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UK services PMI disappoints
Yesterday’s North Korea-fuelled risk-off sentiment appears to be fading. With South Korean intelligence indicating a strong possibility that North Korea was on the brink of testing another weapon, it is clear that traders are not getting too carried away by the flight to risk. With the US and Canadian markets coming back to work following yesterday’s Labour Day celebrations, we are likely to see a pickup in volatility and a jump in volumes.
This morning saw the UK services PMI reading top off a somewhat disappointing set of economic surveys, with manufacturing providing the one bright spark amid slowing growth across the construction and services sectors. The subsequent weakness we have seen from the pound this morning has helped boost the FTSE, which trades in positive territory.
Today’s 11-month low for the UK services PMI points towards yet another quarter of 0.3% GDP growth. There was a silver lining in the fact that we have seen jobs growth hit a 22-month high across all sectors in August.
Ahead of the open we expect the Dow Jones to open 46 points lower, at 21,942.
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