04 Mar

The service sector in the US has slowed down. Tensions between the EU and the UK concerning the Brexit deal have escalated

March 4, 2021

by JustForex

Wednesday was filled with different news backgrounds, both economic and political. ISM Service sector growth was the slowest over nine months. The European Union has announced that it will file a lawsuit against the UK for violating the terms of the Brexit deal. UK Treasury Secretary Rishi Sunak outlined his program of economic assistance, but some sectors of the economy considered it insufficient.

The US Institute for Supply Management services index fell to 55.3 from a nearly two-year high of 58.7 in January, according to the released data on Wednesday. The February indicator was weaker than the most pessimistic forecast in a survey of economists. The volume of new orders decreased the most (51.9 versus 61.8). It was followed by business activity (55.5 versus 59.9). The employment index in the sector also fell to 52.7 from 55.2 a month earlier.

Inflation in the sector stands for another index that the market is closely monitoring. This indicator continues to grow, reaching new peak results: 71.8 against 64.2 a month earlier. Against this backdrop, bond yields increased again. The Treasuries reached 1.49% in a flash and later stabilized at about 1.47%, which ultimately put pressure on the stock market.

The additional negative background is the aggravation of tensions between the UK and the EU. The announcement of filing a lawsuit against the UK for breaching the Brexit deal conditions was presented after the UK government waived customs checks at the border with Ireland until October.

The results of the day turned out to be extremely negative for the stock market. The sell-out of such giants as Apple Inc. and Amazon Inc. outweighed the growth of the energy sector. Nasdaq 100 fell to a two-month low, bringing its losses from its February peak to about 8%. The S&P 500 continued to decline for the second day in a row, hitting its weekly lows.

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Main market quotes:

S&P 500 (F) 3,803.75 -13.00 (-0.34%)

Dow Jones 31,270.09 -121.43 (-0.39%)

DAX 14,080.03 +40.23 (+0.29%)

FTSE 100 6,675.47 +61.72 (+0.93%)

USD Index 91.015 +0.073 (+0.08%)

Important events:
  • – Australia Retail Sales (m/m) (Jan) at 02:30 (GMT+2);
  • – US Initial Jobless Claims at 15:30 (GMT+2);
  • – OPEC+ meeting.

by JustForex

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.


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