market relief

The weakness in the pound has pushed FTSE 100 to its highest level in over two weeks, and made it the best performer in Europe. 

Sterling started the session a negative note and the slowdown in the UK growth rate made matters worse. In the second-quarter economy the economy grew by 1.5%, while economists were anticipating a reading of 1.7%, and that compared with the previous reading of 2%. 

ITV is the biggest gainer on the FTSE 100 after Barclays changed its rating on the stock to overweight from equal weight, and the price target was increased to 200p from 190p. ITV shares are up 3.2% to 173p.

Carillion shares down 11% after the company issued its first-half figures. The troubled construction company had a mixed report. There were additional write-downs, but it is also selling-off non-core assets to raise funds. It managed to secure £140 million committed facility with a few banks, and this will give the company some much needed breathing space. Today’s downward move in the share price comes after two major rallies, so a pullback isn’t a surprise. The company could have up to £16 billion worth of work in the pipeline, it just needs to bridge the funding gap in the meantime.

The EUR/USD is largely unchanged today even though German unemployment dropped to a record-low. The unemployment rate ticked down to 5.6% from 5.7%. Eurozone CPI remained steady at 1.5%, missing the consensus of 1.6%. The euro will be in focus over the weekend when Catalonia holds their referendum on independence.

The GBP/USD was losing ground overnight and the update from Mark Carney, the Governor of the Bank of England, put a bit of extra pressure on the currency. Mr Carney stated that productivity slipped due to uncertainty over Brexit, and he also expressed concerns for the level of UK household debt. 

We are expecting the Dow Jones to open 15 points lower at 22,366, and we are calling the S&P 500 down 1 point at 2509.

At 1.30pm, the US will announce the private consumption expenditure (PCE) index and the consensus is for a reading of 1.5% on an annual basis, and that compares with the July reading of 1.4%. The US will also report personal income and spending, and traders are expecting a reading of 0.2% and 0.1% respectively.

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