FTSE suffers falls of over 1.5% as ISM non-manufacturing data disappoints

<p>The FTSE 100 suffered falls of over 1.5% on Wednesday after the UK Index was led lower by heavy selling in the heavyweight mining, oil and insurance […]</p>

The FTSE 100 suffered falls of over 1.5% on Wednesday after the UK Index was led lower by heavy selling in the heavyweight mining, oil and insurance stocks.

The FTSE had been on a downward spiral for much of the day as investors downsized risky stocks ahead of tomorrow’s Bank of England interest rate decision and Friday’s non-farm payrolls. However, it was the much worse-than-expected ISM data that forced the UK Index to its lows on the day. US ISM non-manufacturing data badly missed market estimates, coming in at a new 15-month low of 52.8 as the US services sector surprisingly slowed in April, when the market was expecting a small growth. This, along with ADP employment figures that also missed estimates, meaning that private employers hired less than the market was expecting last month, weighed on sentiment and focring theFTSE lower by around 90 points on the day.

Today’s US ADP and ISM non-manufacturing data has combined to give investors some jitters ahead of Friday’s payroll data. With the markets having performed well of late, investors have decided to take profits off the table in case Friday’s jobs also disappoint. Little is expected to change from the Bank of Englands current stance when they announce their rate decision tomorrow, and so we can interpret today’s losses as being more about Friday’s jobs data.

FTSE still locked in a range
The FTSE 100 has once again failed to push out beyond the year’s high of 6105 and today’s falls of 1.5%, having reached 6103, convinces that perhaps the UK index remains locked in its 250-point trading range.

Next tops expectations to send retailers higher
In a stark contrast to the broader equity weakness seen throughout Europe were earnings from Next, which reported sales growth in the first quarter that topped most analyst expectations, sending shares higher by 4%. The results are particularly pleasing for shareholders, and sector peer Marks and Spencer also got a boost from the fashion retailer’s results today. The retail sector was by far the best performing sector in London, as a result seeing gains of 2.7%.

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