Tuesday saw a bounce in risk sentiment after various global PMIs offered hope that an economic rebound is well and truly underway. From the eurozone to the UK and over to the US – manufacturing and service sector improvements gave the bulls something to cheer about.
The UK numbers were very encouraging with both sectors seeing significant bounces off the concerning levels seen in previous months. Service sector activity, which contributes around 80% of input into UK GDP, jumped from 29.0 in May up to 47.0. However, the manufacturing sector stole the headlines printing above the contraction/expansion level of 50 (50.1) vs. May’s reading of 40.7. These numbers provide a huge confidence boost to governments, central banks, and the business community. However, one must appreciate these are sentiment indicators and a rebound off records lows was always expected in line with an easing of restrictions. The true test may well lay ahead…
Today’s economic calendar is sadly not as interesting as yesterday’s. Across the trading day, we’ll have German IFO business sentiment numbers, US housing and oil storage data as well as a number of Federal Reserve member speeches. Many will also be keeping a close eye on developments regarding 2nd waves of infection from around the globe.
Written by Viv Savani. 8:53am, June 24th 2020
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