FTSE 100 Slips as North Korea Tests Bomb

The FTSE 100 opened down by 11 points, at 7,426, amidst fears about the global political climate, and the news that North Korea had tested a hydrogen bomb. There has also been an unexpected slowdown in construction activity in the UK.

shareprices.com - Monday, September 04, 2017

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The pound weakened against the dollar, and the also slipped against the euro, as the UK’s PMI data for August showed that the construction sector was on the verge of another recession, after a quarter on quarter fall in output.

PMI is still above the 50 mark, which means that it is expanding, but readings below 52 appear, historically, to be the true tipping point. A fall in PMI echoes the assessment from the European Commission, that confidence in the construction sector is at its lowest since the aftermath of the Brexit vote. The slowdown in the construction sector has been led by a fall in commercial work, which is likely to worsen.

If Brexit negotiations continue to progress slowly, then more firms will be forced to activate their contingency plans, which means that there will be less demand for commercial construction projects. The PMI for the construction industry dropped to 51.1 in August, which is below the analyst expectations of 52.0, with survey respondents reporting subdued investment, and concerns that a lack of new work to replace completed projects could leave building firms in a fragile position over the coming years.

Meanwhile, the price of gold has increased as investors look to traditional safe-havens, while nervously watching the response from global governments to the hydrogen bomb test that North Korea has performed.


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