Market News

• August flash services PMI 51.7 vs 51.5 expected
• Prior 51.7
• August flash manufacturing PMI 52.8 vs 51.8 expected
• Prior 51.9
• August flash composite PMI 52.1 vs 51.7 expected
• Prior 52.0

After the misses from France and Germany, this is a bit of a surprise - especially the services sector estimate. The pace of expansion in the services sector was unchanged from July but comes in better than what we saw from Europe's two largest economies, with growth outside of the region picking up considerably. Who needs France and Germany eh?

Meanwhile, the manufacturing sector also performed well with the index there climbing to a 51-month high as manufacturing output hits a 54-month high in August.

All in all, a further rise in both output and new orders with a…

There is only one set of expiries to take note of on the day, as highlighted in bold below.

That being for EUR/USD at the 1.1685 level. The expiries don't tie to any technical significance, so it may not factor all too much into play in dictating price action.

The dollar remains in a vulnerable spot since Wednesday, with EUR/USD extending the technical break from then. Here is a better capture of the technical situation with price looking for a run above 1.1700 next: EUR/USD extends gains to fresh three-month highs after yesterday's break

As mentioned then, "the technical scope dictates that there is room for the upside to extend towards 1.1800 next" but it would "need to see the bond market continue to play ball for the dollar to weaken…

• Prior 52.2
• Services PMI 48.5 vs 50.1 expected
• Prior 49.8
• Composite PMI 51.0 vs 51.3 expected
• Prior 51.3

Comment:

Phil Smith, Economics Associate Director at S&P Global Market Intelligence:

"The recovery in the manufacturing sector has regained momentum, after it showed signs of stalling in the second quarter. Output, new orders and export sales have all risen at their quickest rates since early-2022, which likely reflects some catch-up from the more subdued picture we saw a few months back at the peak of the uncertainty and spike in oil prices associated with the Middle East war, as well as the influence of increased defence spending filtering through. It still remains to be seen if this pace of growth can be sustained, not least in light of…

Q3 earnings sentiment turns defensive as Walmart deepens the warning

Q3 earnings reactions have shifted into a more defensive phase. Walmart’s roughly 9% decline, almost twice its expected earnings move, is the clearest new warning. Strong reactions in Deere and Ross Stores show that this remains a selective stock-picker’s market, not a broad earnings panic.

Key takeaways for stock investors and traders

• Walmart’s outsized decline materially worsened the earnings-season picture.

• The weakness did not begin with Walmart. Negative reactions have been accumulating across several earnings batches.

• Strong companies can still rally, but investors are becoming less forgiving of disappointment.

• Broad index exposure now carries more risk because one…

• August business confidence 98 vs 98 expected
• Prior 97

The French business climate indicator picks up again in August, nudging back up to the highest since February. That being said, it's still keeping below the long-term average threshold of 100 - not having touched that since May 2024.

The improvement comes amid better sentiment in most broader sectors with employment conditions also holding steady. The detailed breakdown is seen below:

• Manufacturing confidence 103 vs 101 prior
• Services confidence 100 vs 99 prior
• Retail trade confidence 99 vs 96 prior
• Employment indicator 99 vs 99 prior

This is at least a good signal of how French business sentiment is holding up in Q3, but we'll have a better sense of how things actually might be playing out…

• August flash services PMI 48.4 vs 49.8 expected
• Prior 49.6
• August flash manufacturing PMI 51.5 vs 50.0 expected
• Prior 49.8
• August flash composite PMI 48.8 vs 49.5 expected
• Prior 49.4

The French private sector economy remains weak in August, with another contraction seen in overall business activity. This once again continues to reaffirm that the French economy remains on track for yet another subdued and mediocre quarterly showing as demand conditions remain soft.

The services sector was the main drag, offsetting the better showing in the manufacturing sector in August - which saw production rise for the first time since April. Of note, extreme heat was cited as a reason for lower activity levels. That sees demand conditions fall off further as…