EURGBP falls to 3-week low after PMI data; Barclays shares surge

Summary:

• Eurozone manufacturing PMI slides below 50
• German reading hits lowest level in over 6 years
• Barclays bank shares rise after earnings 

The release this morning of a batch of industry surveys from across the Eurozone have served to further reinforce the notion that economic activity in the bloc is slowing, with the manufacturing sector a particular cause for concern. A Euro area-wide manufacturing PMI slid below the 50 mark for the first time since the June 2013 release and in doing so signals a contraction in the index. The reading of 49.2 was below the 50.3 expected and extends a remarkable run of 7 consecutive misses for this data-point and means that 12 of the last 14 have been lower than economists’ forecasts. Unsurprisingly this has led to some selling in the single currency with the Euro falling to its lowest level of the month against the pound.

The EURGBP has dropped to a 3-week low this morning with the market drifting back down towards the longer-term support zone around 0.8620. Source: xStation

Manufacturing activity in Germany at a 74-month low

Germany, which has the largest and therefore the most important manufacturing sector in the bloc, delivered an especially stark warning with the PMI reading of 47.6 the lowest in over 6 years. Due to a large amount of its products (EG cars) being exported, manufacturing in Germany is often seen as a proxy for the health of the global economy and therefore the soft data could be seen as indicative of a wider slowdown. In terms of factors behind the slowdown the usual suspects are taking the blame with trade tensions chief amongst them. The US-Sino trade tensions continue to wrangle on and have had a clear negative impact on the Chinese economy while more specifically to Germany the threat of tariffs on its cars from the US continues to hover menacingly overhead.

Barclays outperforms its peers

Following on from a solid trading update at Lloyds bank yesterday, Barclays have delivered more good news for the UK banking sector with a solid set of results. A better than expected performance from the trading floor was a key contributor to Barclays posting an annual profit of £1.4B on revenues of £21.2B with Traders managing to navigate the stock market rout at the end of 2018 better than its rivals while the fixed-income unit also outperformed most of its European peers. The results will be particularly pleasing for the bank given that activist investor Edward Bramson, who has roughly a 5.5% stake in Barclays, has been an outspoken critic of the investment bank side of the business, calling it a “black box with too much leverage.” Shares in Barclays are up by over 3% on the day with the stock at the head of the FTSE leader board and close to a 3-month high. The broader index has pulled back, with the FTSE below the 7200 and down by around 45 points on the day and in doing so has handed back Wednesday’s gains.

Barclays shares have gapped higher this morning and the market has moved up to its highest level in over 3 months. Price has broken out of a downtrend going back almost 12 months and could now look to recoup some of those losses. Source: xStation