Brexit 3

Euro zone morale at its lowest level since October 2016; Brexit influencing the UK’s construction industry

Jun 5 • Morning Roll Call • 62 Views • No Comments

On Monday, we have witnessed again a detrition of the investor morale caused by the Italian anti-establishment government taking over, as well as the trade war with the US. The Euro zone Sentix investor confidence was expected to come at 18.6 reading, whereas the actual result was 9.3, far away from the prediction. According to the managing director at Sentix, Mr. Huebner, the new Italian government is causing a great concern among the investors, as it is seen as hostile to the euro. The main concern of the investors is the prospect of the coalition to increase spending, cut taxes and place challenges in front of the EU fiscal rules. Furthermore, Trumps’ administration has withdrawn the exemptions from the global tariffs given initially to Europe, Canada and Mexico, forcing Brussels to submit an 8 page list to the WTO, covering goods which would be affected with retaliatory measures.

Yesterday, we have also seen just a modest recovery of the Britain’s construction industry, where the construction PMI reading came at 52.5, as opposed to the expected 52.0. The activity growth has been subdued in the previous month due to the uncertainty towards the Brexit outlook. According to the HIS Markit economist, Sam Teague, inflows of new business have declined as companies frequently noted that Brexit uncertainty and delicate business confidence have led towards a delay in the building decisions in the previous month.

Today we are expecting news with regards to the PMI coming from the Spain, Italy, France, Germany and EU final services PMI. This is followed by the GBP services PMI and later during the day, PMI readings are expected from the US.

ECONOMIC CALENDAR EVENTS FOR JUNE 5th

AUD RBA Rate Statement
EUR Final Services PMI
GBP Services PMI
GBP MPC Member Cunliffe Speaks
CAD Labor Productivity q/q
USD ISM Non-Manufacturing PMI
USD JOLTS Job Openings

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